US Inflation Indicator Hits 40-Year High Surge... December Core PCE Up 4.9%

[Asia Economy New York=Special Correspondent Joselgina] The price index primarily referenced by the U.S. central bank, the Federal Reserve (Fed), rose at the fastest rate in 40 years. This is expected to further strengthen the Fed's early tightening measures.

The U.S. Department of Commerce announced on the 28th (local time) that the Personal Consumption Expenditures (PCE) price index for December last year increased by 5.8% compared to the previous year. This is the largest increase since June 1982.

The core PCE price index, which excludes volatile food and energy prices, rose 4.9% compared to a year ago. This year-over-year increase was the highest since 1983. The core PCE is the Fed's most preferred inflation indicator when monitoring inflation trends. This index also rose slightly compared to the previous month (4.9%).

Personal income increased by 0.3%, falling short of market expectations (0.4%). Consumer spending decreased by 0.6%. Local media analyzed that consumers, concerned about global supply chain disruptions, may have brought forward their usual year-end shopping period, resulting in weak December consumer spending.

On the same day, the U.S. Department of Labor released the Employment Cost Index (ECI) for the fourth quarter of last year, which rose 4.0% compared to the previous year. Wages, which account for a significant portion of employment costs, increased 4.5% year-over-year and 1.1% quarter-over-quarter.