Current:Home > FinanceAn inflation gauge closely tracked by the Federal Reserve shows price pressures easing gradually -Excel Money Vision
An inflation gauge closely tracked by the Federal Reserve shows price pressures easing gradually
View
Date:2025-04-18 16:19:05
WASHINGTON (AP) — A measure of inflation that is closely tracked by the Federal Reserve slipped last month in a sign that price pressures continue to ease.
The government reported Friday that prices rose 0.3% from January to February, decelerating from a 0.4% increase the previous month in a potentially encouraging trend for President Joe Biden’s re-election bid. Compared with 12 months earlier, though, prices rose 2.5% in February, up slightly from a 2.4% year-over-year gain in January.
Excluding volatile food and energy costs, last month’s “core” prices suggested lower inflation pressures. These prices rose 0.3% from January to February, down from 0.5% the previous month. And core prices rose just 2.8% from 12 months earlier — the lowest such figure in nearly three years — down from 2.9% in January. Economists consider core prices to be a better gauge of the likely path of future inflation.
Friday’s report showed that a sizable jump in energy prices — up 2.3% — boosted the overall prices of goods by 0.5% in February. By contrast, inflation in services — a vast range of items ranging from hotel rooms and restaurant meals to healthcare and concert tickets — slowed to a 0.3% increase, from a 0.6% rise in January.
The figures also revealed that consumers, whose purchases drive most of the nation’s economic growth, surged 0.8% last month, up from a 0.2% gain in January. Some of that increase, though, reflected higher gasoline prices.
Annual inflation, as measured by the Fed’s preferred gauge, tumbled in 2023 after having peaked at 7.1% in mid-2022. Supply chain bottlenecks eased, reducing the costs of materials, and an influx of job seekers made it easier for employers to keep a lid on wage growth, one of the drivers of inflation.
Still, inflation remains stubbornly above the Fed’s 2% annual target, and opinion surveys have revealed public discontent that high prices are squeezing America’s households despite a sharp pickup in average wages.
The acceleration of inflation began in the spring of 2021 as the economy roared back from the pandemic recession, overwhelming factories, ports and freight yards with orders. In March 2022, the Fed began raising its benchmark interest rate to try to slow borrowing and spending and cool inflation, eventually boosting its rate 11 times to a 23-year high. Those sharply higher rates worked as expected in helping tame inflation.
The jump in borrowing costs for companies and households was also expected, though, to cause widespread layoffs and tip the economy into a recession. That didn’t happen. The economy has grown at a healthy annual rate of 2% or more for six straight quarters. Job growth has been solid. And the unemployment rate has remained below 4% for 25 straight months, the longest such streak since the 1960s.
The combination of easing inflation and sturdy growth and hiring has raised expectations that the Fed will achieve a difficult “soft landing″ — taming inflation without causing a recession. If inflation continues to ease, the Fed will likely begin cutting its key rate in the coming months. Rate cuts would, over time, lead to lower costs for home and auto loans, credit card borrowing and business loans. They might also aid Biden’s re-election prospects.
The Fed tends to favor the inflation gauge that the government issued Friday — the personal consumption expenditures price index — over the better-known consumer price index. The PCE index tries to account for changes in how people shop when inflation jumps. It can capture, for example, when consumers switch from pricier national brands to cheaper store brands.
In general, the PCE index tends to show a lower inflation level than CPI. In part, that’s because rents, which have been high, carry double the weight in the CPI that they do in the PCE.
Friday’s government report showed that Americans’ incomes rose 0.3% in February, down sharply from a 1% gain in January, which had been boosted by once-a-year cost-of-living increases in Social Security and other government benefits.
veryGood! (54797)
Related
- House passes bill to add 66 new federal judgeships, but prospects murky after Biden veto threat
- Ohio River near Pittsburgh is closed as crews search for missing barge, one of 26 that broke loose
- How to tackle crime in Indian Country? Empower tribal justice, ex-Justice Department official says
- Maine is latest state to approve interstate compact for social worker licenses
- Have Dry, Sensitive Skin? You Need To Add These Gentle Skincare Products to Your Routine
- Anna Paquin and Stephen Moyer's Love Story Will Truly Warm Your Blood
- Jill Duggar Suffers Pregnancy Loss and Announces Stillbirth of Her First Baby Girl
- Scottie Scheffler unstoppable and wins another Masters green jacket
- Angelina Jolie nearly fainted making Maria Callas movie: 'My body wasn’t strong enough'
- How big is the Masters purse, and how much prize money does the winner get?
Ranking
- Which apps offer encrypted messaging? How to switch and what to know after feds’ warning
- How to tackle crime in Indian Country? Empower tribal justice, ex-Justice Department official says
- Opioid settlement cash being used for existing programs and salaries, sparking complaints
- Pilot of experimental plane fell out and hit the tail in 2022 crash that killed 2, investigators say
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Triathlon
- ERNEST on new album and overcoming a heart attack at 19 to follow his country music dreams
- Plan an Organized & Stress-Free Move with These Moving & Packing Essentials
- Inside Houston's successful strategy to reduce homelessness
Recommendation
Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Hi Hi!
RHOP Star Mia Thornton's Estranged Husband Gordon Shares Bipolar Diagnosis
Suspect in custody after shots fired from Marina del Rey rooftop prompt alert in Los Angeles area
Peso Pluma addresses narcocorrido culture during Coachella set, pays homage to Mexican music artists
US appeals court rejects Nasdaq’s diversity rules for company boards
MLB power rankings: Sluggers power New York Yankees to top spot
Guide dog nicknamed Dogfather retires after fathering over 300 puppies
'The Sympathizer' review: Even Robert Downey Jr. can't make the HBO show make sense