Inflation Firmed, Consumer Spending Jumped in January

Inflation firmed and Americans’ spending and income surged in January, prompting the Federal Reserve to raise interest rates higher than anticipated this year. U.S. consumers’ spending jumped 1.8% in January, the largest increase in nearly two years.

February 26, 2023 . 2:04 PM

1 min read

Inflation firmed and Americans’ spending and income surged in January, which could prompt the Federal Reserve to raise interest rates higher than previously anticipated this year to cool price pressures.
The Fed’s preferred inflation gauge—the personal-consumption expenditures price index—rose 5.4% in January from a year earlier, the Commerce Department said Friday.
U.S. consumers’ spending jumped a seasonally adjusted 1.8% in January from the prior month, the largest increase in nearly two years.
The January spending boom was driven in part by a strong increase in household income, the Commerce report showed.
The Fed raised the fed-funds rate by a quarter point on Feb. 1 to a range of 4.5% to 4.75%, following six consecutive larger increases.