Inflation Picked Up In January, Latest BEA Data Show

2025-03-04 10:05:00 ET

Summary

• The Personal Consumption Expenditures Price Index, which is the Federal Reserve’s preferred measure of inflation, grew at an annualized rate of 4.0 percent in January 2025, up from 3.6 percent in the prior month.
• Core PCEPI grew at an annualized rate of 3.5 percent in January 2025, up from 2.5 percent in the prior month.
• Since the price increases across the year have been larger than usual over the last few years, the seasonal adjustments have generally removed too little in high-inflation months like January and added too little in the low-inflation months.
• So long as twelve-month rates continue to fall, we should not be concerned about an inflation resurgence.

By William J. Luther

Federal Reserve officials have warned that the disinflation process would be uneven. The latest data from the Bureau of Economic Analysis (BEA) confirms as much. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at an annualized rate of 4.0 percent in January 2025, up from 3.6 percent in the prior month. PCEPI inflation has averaged 2.6 percent over the last six months and 2.5 percent over the last twelve months....

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