US PCE Price Indicator: Inflation is more persistent than previously thought
The "PCE" data, personal consumer expenditure, the US consumer spending index, which is very important because it is preferred by the FED in defining monetary policy and interests, has been published. Let's see how it went and what will happen.
The U.S. Personal Consumption Expenditure Price Index increased 0.3% month-over-month in January 2024, in line with market expectations of 0.3% and following a 0.1% increase revised downwards in December. So inflation has reawakened a bit.
Prices for services increased by 0.6% while goods decreased by 0.2%. T he annual rate slowed to 2.4% , the lowest since February 2021, from 2.6% the previous month and compared to forecasts of 2.4%.
Meanwhile, monthly core PCE inflation, which excludes food and energy and is the Fed's preferred measure of inflation, rose 0.4%, the largest increase since February last year and higher than the rate revised downwards by 0.1% recorded in December, in line with expectations. Separately, food prices rose 0.5% and energy prices fell 1.4%.
Finally, the annual core inflation rate slowed for the 12th consecutive month to 2.8% from 2.9%, a new low since March 2021 and in line with forecasts of 2.8%. This is indicative that However, US wage dynamics are calming.
Here is the short-term graph:
And here is the average graph, with a five-year horizon
The problem is that, despite having reduced on an annual level, the price index of private spending has fallen on an annual basis, but it had a flicker in January which raises doubts whether US inflation is not yet completely tamed and that, therefore, we should not give in too soon with interest rates. I think that these data have instilled further calm in decision makers, who will want to look at the month that has just ended, to evaluate whether it was an episode or not.
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The article US PCE Price Indicator: Inflation Is More Persistent Than Thought comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/indicatore-dei-prezzi-pce-usa-linflazione-e-piu-persistente-di-quanto-si-pensasse/ on Fri, 01 Mar 2024 07:00:44 +0000.