Annual inflation is running at the hottest pace in nearly four decades as widespread supply disruptions, extraordinarily high consumer demand and worker shortages fuel rapidly rising price increases.
In the one-month period between November and December, prices jumped 0.4% .
The PCE report was accompanied by data on household spending, which showed that consumer spending fell 0.6% last month, with purchases of cars, electronics and clothes declining. Higher prices may have deterred some households from shopping, along with a surge of the highly contagious omicron variant, which has elicited some fresh business restrictions.
Raging inflation has inflicted financial pain on millions of U.S. households, particularly low-income families, eroding wage gains and setting up a massive political challenge for President Biden, who has seen his approval rating sink in conjunction with the rising prices. It has also forced the Federal Reserve to concede that surging prices are not transitory and to take steps to dramatically normalize policy.
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