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Consumers spent strongly at the start of the year, complicating the Federal Reserve’s efforts to slow inflation. The Personal Consumption Expenditures price index, the Fed’s preferred gauge of inflation, came in hotter than anticipated, up 5.4% from the year before. Core PCE, stripped of volatile food and energy costs, was up 4.7% from the year before in January. This is the first uptick in the series in several months. Like the Consumer Price Index report released earlier this month, these numbers suggest that inflation will be harder to shake in 2023.
The month-over-month increases in PCE
