Inflation and consumer spending surged in January
An inflation index tracked closely by the Federal Reserve rose 0.6% in January, as prices for the goods and services that Americans consume jumped at a faster pace, the Commerce Department said on Friday.
Why it matters: The report also showed that consumers' spending increased and after-tax incomes rose last month. Taken together, these indicators are the latest evidence that the U.S. economy started the year on a strong note — bucking signs of a slowdown at the end of last year.
By the numbers: The personal consumption expenditures index rose 0.6% in January compared to the 0.2% in December. In the year through last month, the index is up 5.4% — a tick higher than the 5.3% in the prior month.
- Excluding volatile energy and food costs, the index rose 0.6% versus the 0.4% in December. In the 12 months through January, it rose 4.7% — up from the 4.6% the month before.
The big picture: The report offered other clear signs of more demand from consumers. Spending soared by 1.8% last month, after back-to-back months where consumer spending fell.
The bottom line: The data adds to a running list of signs indicating the economy was strong in January, with hotter inflation and booming consumer demand.
- That's despite aggressive efforts on the part of the Federal Reserve to slow the economy down.