A key inflation indicator increased to its highest level in 38 years while consumer demand remained strong despite soaring prices, the Commerce Department announced Friday.
The Commerce Department’s personal consumption expenditure (PCE) index grew 5.2% in January, exceeding the 5.1% Dow Jones estimate, the Commerce Department reported. The PCE is the Federal Reserve’s preferred measure of inflation, and January’s figure marks monthly the largest year-over-year increase since April 1983.
The PCE increased 0.5% on a monthly basis in January, the same pace as the previous three months, according to the Commerce Department. Including food and energy prices, overall PCE surged 6.1% since January 2021, marking the most annual growth since February 1982.
Dominion Energy, which is the largest energy company in Virginia, is asking the state to halt the next scheduled rate increase because Governor-elect Glenn Youngkin’s energy plan would make the hike unnecessary.
On Jan. 1, Dominion began implementing the state-approved rate increase to recover costs associated with purchasing allowances through the Regional Greenhouse Gas Initiative, which is a carbon-trading initiative designed to gradually reduce carbon emissions. The initial increase for 2022 cost a residential customer nearly $30 over the year, but those costs would continue to go up if Virginia stays in the compact. According to the State Corporations Commission (SCC), RGGI would cost about $5.9 billion between 2019 and 2043 and would lead to a rate increase between $84 and $144 annually.
Black Hills Energy’s base rate for natural gas will increase Jan. 1, the Iowa Utilities Board ruled this week.
Non-gas costs on residential customers’ bills will rise from $0.13625 per Therm to $0.13905 per Therm. The typical monthly increase in base rates for residential customers will be $1.45, the IUB said in a news release Dec. 28.
The Consumer Price Index (CPI) increased 0.9% in November, bringing the key inflation indicator’s year-over-year increase to 6.8%, the highest figure in four decades.
The CPI’s increase is the largest increase in four decades, up from October’s 6.2% according to the U.S. Bureau of Labor Statistics (BLS) report released Friday morning. Experts surveyed by CNBC projected inflation would increase 0.7% in November, translating to a 6.7% gain on a year-over-year basis.
“These are frighteningly high inflation numbers, the likes of which we haven’t seen for decades,” Allen Sinai, chief global economist and strategist at Decision Economics, Inc., told The Wall Street Journal.
The White House downplayed surging energy prices in the U.S. and worldwide on Wednesday, arguing that the climate crisis was more important.
“Certainly, we all want to keep gasoline prices low, but the threat of the crisis — the climate crisis — certainly can’t wait any longer,” White House Press Secretary Jen Psaki told reporters Wednesday.