Breaking News         Latest US News              New York News              Fx Tribune

How to Become a Profitable Forex Trader in 2018
Growth in consumer spending slowed in January despite a solid increase in incomes as rising prices hurt Americans’ buying power.The annual inflation rate rose to 1.9%, its highest level since 2012 and close to the Federal Reserve’s target, the...

Consumer spending growth slows as rising inflation hits Americans' purchasing power

Growth in consumer spending slowed in January despite a solid increase in incomes as rising prices hurt Americans’ buying power.The annual inflation rate rose to 1.9%, its highest level since 2012 and close to the Federal Reserve’s target, the...

Consumer spending growth slows as rising inflation hits Americans' purchasing power

Growth in consumer spending slowed in January despite a solid increase in incomes as rising prices hurt Americans’ buying power.

The annual inflation rate rose to 1.9%, its highest level since 2012 and close to the Federal Reserve’s target, the Commerce Department said Wednesday.

The data boosted the likelihood that the Fed would raise a key interest rate again in the coming months in an attempt to slow rising inflation.

Although personal income increased by 0.4% in January, up from 0.3% the previous month, inflation took a big bite out of the spending power of that growth. Disposable income after adjusting for inflation declined 0.2% in January, the first such drop in more than three years.

Rising prices also hit consumer spending, which after adjusting for inflation declined by the most since 2009.

Overall, consumer spending increased 0.2% in January, down from 0.5% the previous month and a tick below analysts’ expectations.

But taking into account the rise in prices, consumer spending declined 0.3% in January. It was the first such drop since the summer and a sharp change from a 0.3% inflation-adjusted increase in December.

The Commerce Department’s price index for personal consumption expenditures is the preferred inflation gauge of Fed monetary policymakers. 

The index rose 0.4% in January, twice the increase of the previous month. That meant that for the 12 months ended Jan. 31, prices rose 1.9%.

The annual inflation rate through Dec. 31 was 1.6%. 

The Fed wants prices to rise 2% annually. With strong job growth and the unemployment rate low, an increase in inflation to near the Fed’s target provides more impetus for another hike in the central bank’s benchmark short-term interest rate.

With consumer confidence high and the Trump administration pushing stimulative policies such as tax cuts and increased government spending, Fed officials don’t want inflation to rise too high.

At the Fed’s latest meeting Jan. 31-Feb. 1, officials said another small rate hike could come “fairly soon,” according to minutes released last week. That echoed recent comments from Fed Chairwoman Janet L. Yellen and other policymakers that they could raise the rate at one of their upcoming meetings.

The Fed’s next meeting is March 14-15. Investors believe there is a 29% chance of a 0.25 percentage point rate increase at that meeting, according  to the CME Group futures exchange.

The Fed raised the rate by 0.25 percentage point in December to a target of between 0.5% and 0.75%, the first hike in a year. At the time, Fed policymakers indicated three more increases were coming in 2017. 

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

President Trump to address Congress tonight, a PwC accountant is at the center of the Oscars gaffe, remembering the 1997 North Hollywood shootout, and the real goal of Trump's executive orders.

Watch a time-lapse of the 89th Academy Awards red carpet in two minutes.

Watch a time-lapse of the 89th Academy Awards red carpet in two minutes.

Construction begins on a new $1.6-billion terminal at Los Angeles International Airport. (Mark Boster / Los Angeles Times)

Construction begins on a new $1.6-billion terminal at Los Angeles International Airport. (Mark Boster / Los Angeles Times)

Oscars Red Carpet Full Interview: Trevante Rhodes

Oscars Red Carpet Full Interview: Trevante Rhodes

"Moonlight" won the best picture Oscar after a botched announcement threw the ceremony into chaos.

"Moonlight" won the best picture Oscar after a botched announcement threw the ceremony into chaos.

The U.S. labor force's guy problem: Lots of men don’t have a job and aren’t looking for one »

How Trump could use the presidency to help his own business interests »

jim.puzzanghera@latimes.com

Follow @JimPuzzanghera on Twitter

Our editors found this article on this site using Google and regenerated it for our readers.

Breaking News Headlines

banner30
Five simple steps to trade the options like a pro
Five simple steps to trade the options like a pro
How to Become a Profitable Forex Trader in 2018
How to Become a Profitable Forex Trader in 2018
Away From the US? Here are 5 Places You Can Still Watch the Super Bowl
Away From the US? Here are 5 Places You Can Still Watch the Super Bowl
Venus Williams' Phone Records Will Be Subpoenaed in Wrongful Death Case
Venus Williams' Phone Records Will Be Subpoenaed in Wrongful Death Case
4 Things You Need to Understand About DUI Charges
4 Things You Need to Understand About DUI Charges
Top 6 Facts You Should Know About Muay Thai
Top 6 Facts You Should Know About Muay Thai
Half a hundred injured in a train wreck in Germany
Half a hundred injured in a train wreck in Germany
A Democratic congressman announces his immediate withdrawal from allegations of sexual harassment
A Democratic congressman announces his immediate withdrawal from allegations of sexual harassment
27,000 evacuated by a massive fire in southern California
27,000 evacuated by a massive fire in southern California
Liberated in Ukraine The Georgian former President Saakashvili
Liberated in Ukraine The Georgian former President Saakashvili
Trump orders the largest reduction in natural reserves in American history
Trump orders the largest reduction in natural reserves in American history
Trump orders in Utah the largest reduction in natural reserves in American history
Trump orders in Utah the largest reduction in natural reserves in American history
POLLS Results ALL
Who is the most powerful actor in Syria

banner31
Front Pages
  • The Sun
NEWS ARCHIVES