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According to the most recent monthly update of the Federal Reserve’s favoured inflation indicator, consumer prices increased less in February than anticipated.
Compared to the 0.4% projected and the 0.5% increase in January, the price index for core personal consumption expenditures increased by only 0.3% in February.
As a result, the annual increase in core PCE price decreased slightly to 4.6% from 4.7%, marking its lowest level since the end of 2021.
The data may persuade the Fed that it no longer needs to raise interest rates significantly in order to control inflation. Although headline core PCE inflation has been down for a full year, it is proving to be more resistant than the Fed had anticipated while the United States continues to experience pandemic-related disruption.
In accordance with forecasts, household consumption and income increased by a moderate 0.2% and 0.3% on a monthly basis, respectively, according to other data provided at the same time. The Bureau of Economic Analysis reported that as the used car market continued its return to pre-pandemic norms, significant gains in spending on housing, health care, and gasoline were offset by substantial declines in expenditures on motor cars and accessories.
The personal savings rate ticked up to 4.6% from 4.4%.
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