- Recent report from the Personal Consumption Expenditures (PCE), reveals a slight upsurge in inflation in the United States.
- The cryptocurrency market has reacted negatively to the new development as the price of assets like Bitcoin has taken a nosedive.
The United States, like many other nations, is being hit with inflation, as the economy continues to suffer many setbacks. It has recently been reported that inflation in the United State has risen by a slight percentage within the last month.
On Friday, new data revealed that a major inflation tracker rose last month. According to the Personal Consumption Expenditures (PCE), the U.S. inflation rate has spiked by 5.4%. It is worth noting that the increase in inflation is on a yearly basis in January 2023, from the 5.3% levels in December 2022. In November of 2022 and October of 2022, the inflation rate was sitting at 5.6% and 6.1% respectively.
The Personal Consumption Expenditure index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior. The PCE price index is rolled out on a monthly basis, and shows the changes in the prices of goods and services that are being purchased by consumers based in the United States.
The rise in inflation could trigger an increase in interest rate from the Federal Reserve
The spike in inflation, despite being mild, is still very alarming to the entire cryptocurrency market for a myriad of reasons. The spike inflation rate also surpassed 4.9%, which was the level anticipated by key industry players.
Additionally, the core inflation increased by 4.7% from a year prior. This surge was not expected to happen so quickly, as it is now above the 4.7% levels that was recorded in December.
Speaking to Reuters, Cleveland’s Fed President Loretta Mester explained that the report indicates that „the impulse of inflation and price pressures is still with us.”
„It’s going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%.“ She added.
As inflation surges, the U.S. Feds might continue to increase interest rates, in an attempt to level the increase in prices of goods and services. This might in turn affect digital assets that have already reacted to the reports.
The cryptocurrency market did not respond positively to the new development. Bitcoin, the most valued cryptocurrency by market cap, saw a decline of 0.63% not long after. The asset, now trading at a price of 23,239, has recorded a 5.83% loss in the last 7 days.
Similarly, Ethereum, the second most valued asset also saw a downward reversal. However, the asset has gone on to make a mild recovery, as bulls have since recorded hourly gains. Ethereum (ETH) is now comfortably sitting at a price of $1,603 at press time.
