The core Personal Consumption Expenditures (PCE) price index, a key inflation gauge reached its highest level since 1983, the Commerce Department reported on Friday.

The PCE price index, excludes food and energy prices, grew 4.9% on a year-over-year basis as of December 2021, slightly ahead of the 4.8% Dow Jones estimate and ahead of the 4.7% figure in November, the Commerce Department reported.

According to CNBC, personal income grew 0.3% in December 2021, slightly lower than experts’ 0.4% estimate, while consumer spending dipped 0.7%.

In a tweet, Josh Jordan @ NumberMunchers said the core PCE is a measure of inflation that the Fed likes for deciding on policy, jumped to the highest level in 38 years. “Another one of those you got a nice raise but are ending up with less money,” he tweeted.

On Thursday the Commerce Department announced the U.S. economy grew at a faster rate than anticipated, with Gross Domestic Product (GDP) increasing 6.9% on a year-over-year basis as of the fourth quarter. Economists surveyed by the Wall Street Journal had expected that GDP would increase at a 5.5% annualized rate.

Inflation has soared to a new four-decade high, with the Consumer Price Index (CPI) increasing 7% as of December 2021 on a year-over-year basis. Inflation triggered the Federal Reserve to employ an aggressive asset purchasing policy, but Fed Chairman Jerome Powell announced last Wednesday that the central bank would slow this program, potentially ending by March as the economy recovers from the COVID-19 pandemic.

Interest rates will remain near zero, and the Fed will likely begin its rate hike in mid-March once the bank completes its asset purchasing program, Powell said last Thursday.

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