The Federal Reserve’s preferred inflation gauge is expected to have registered another strong monthly gain, in the latest sign that the US central bank needs to reduce the ultra-easy monetary policy that has been in place since the start of the pandemic.

The core personal consumption expenditures price index is set to have increased another 0.5 per cent in January, following a similar monthly increase in December, according to a consensus forecast compiled by Bloomberg.

That is expected to translate to an annual increase of 5.2 per cent, the fastest pace in roughly four decades and an acceleration from the 4.9 per cent increase recorded in December.

Once volatile items such as food and energy are factored in, the PCE index is expected to have jumped 6 per cent from the same time last year, or 0.6 per cent on a month-over-month basis.

Fed officials are monitoring inflation data closely as they assess how quickly to raise interest rates this year from today’s near-zero levels.

The rising price pressures are expected to have been accompanied by a 0.3 per cent decline in personal incomes and a 1.5 per cent rise in household spending at the start of the year.

The data will be published by the commerce department at 8:30am Eastern Time on Friday.

The data comes on the heels of Russia’s military invasion of Ukrainewhich has left policymakers scrambling to discern the potential economic effects.

Comments from a number of Fed officials as well as developments in Ukraine have quietened speculation of a half-point rate rise from the Fed in March. But the US central bank is still expected to proceed with its first rate increase at its next meeting in the middle of next month. Markets currently anticipate a five further quarter-point adjustments during the remainder of the year.

Several officials have spoken out in recent days about potential risks to economic growth and the inflation outlook.

Energy prices have soared since the incursion into Ukraine, with Brent crude breaking through $100 a barrel for the first time since 2014, when Russia annexed Crimea. Further gains in energy costs could feed through to prices at the pump and send overall inflation higher, economists say, complicating the Fed’s equations.

Raphael Bostic, president of the Atlanta Fed, said on Thursday that while he is watching events in Ukraine closely, it is “appropriate” for the Fed to move away from its emergency policy stance.

Mary Daly, San Francisco Fed president, and Thomas Barkin of the Richmond Fed, have expressed similar views, as has Loretta Mester, president of the Cleveland Fed and a voting member of the Federal Open Market Committee this year.