Does the Fed prefer to ignore inflation on food and energy?
*Financial Times, by Chris Bryant, May 1, 2008:
"US consumer struggles in face of inflation
US consumer spending rose more than expected in March but the bulk of
the increase reflected higher costs for food and energy, a new report
showed on Thursday.
The economic headwinds facing consumers were also reflected in the
latest report on the US labour market which registered the highest
number of Americans on unemployment benefits in four years.
Personal spending rose 0.4 per cent in the latest month, twice the rate
forecast by economists and an improvement on the 0.1 per cent growth
rate recorded the previous month.
Incomes rose 0.3 per cent, roughly in line with economists’
expectations after increasing by 0.5 per cent in March.
Adjusted for inflation, real spending increased only 0.1 per cent,
having stalled in February while inflation-adjusted disposable income
fell by slightly less than 0.1 per cent.
The core PCE price index, the Federal Reserve’s preferred inflationary
measure which strips out food and energy costs, rose by 0.2 per cent,
marking an increase of 2.1 per cent over the year, a fraction above the
Fed’s stated comfort level of 2 per cent."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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