US inflation indicator advances 5.8% in 2021, highest in almost 40 years

The Personal Consumption Expenditure (PCE) Price Index rose 5.8% between December 2020 and December 2021, the highest since 1982, according to data released by the Center for Economic Analysis of the United States. U.S this Friday (28).

The indicator is used as a reference by the Federal Reserve, the US central bank, for the inflation in the country. Another inflation index, the CPI, rose by 7% in 2021, also registering the biggest increase since 1982.

Energy prices alone rose by nearly 30% over 2021, while food prices rose by 5.7%.

Excluding these two components, the core index – which is the Federal Reserve’s preferred measure of inflation – rose 4.9% in the 12 months to December. That was the fastest price increase for that measure since 1983.

In December, PCE rose 0.4% and the core index rose 0.5%, in line with market expectations, as shortages caused by overloaded supply chains keep inflation high. The rise was lower than the 0.6% in October and November. Core prices advanced at the same value as in November.

As prices rose, so did US income – albeit at a slower pace. Personal income increased 0.3%, or $70.7 billion, in December, while disposable income increased 0.2%, or $49.9 billion.

Consumer spending fell in December, suggesting the economy slowed in early 2022 amid disruptions to supply chains and outbreaks of coronavirus infections. Covid-19.

The Commerce Department said consumer spending, which accounts for more than two-thirds of US economic activity, fell 0.6% last month, after rising 0.4% in November. Economists polled by Reuters had forecast a 0.6% decline in consumer spending.

*With information from Reuters