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The Personal Consumption Expenditures (PCE) price index increased at an annualized rate of 0.3 percent in January, following declines of 1.8 and 0.2 percent in the two prior months. Since January of 2012, the headline PCE price index has increased just 1.2 percent, as the year-over-year changes have been trending downward since October. Slowing growth in the headline index was a 20.9 percent decline in the price of energy goods and services, a volatile component in that index. Energy prices declined each month from November through January, and are basically flat on a year-over-year basis. Food prices, another volatile component, were flat in January following 2.5 percent increases in both November and December, respectively, and have increased 1.0 percent since last January.
Excluding food and energy prices, the “core” PCE price index increased 1.8 percent in January compared with an increase of 0.3 percent in December. The near-term (three-month) trend in monthly increases is 1.0 percent, slightly below the average monthly increase of 1.4 throughout 2012. On a year-over-year basis, “core” PCE prices have increased just 1.3 percent. The market-based “core” PCE price index, which also excludes most imputed prices, increased 2.6 percent in January, compared with increases of 0.6 and 0.3 in November and December, and has increased 1.4 percent since last year.