The U.S. Federal Reserve’s key inflation measure, the personal consumption expenditures (PCE) price index, rose more than expected in February, while consumer spending showed a smaller-than-forecast increase, according to the latest report from the Commerce Department released on Friday.
The core PCE price index, which excludes volatile food and energy prices, increased by 0.4% for the month, putting the 12-month inflation rate at 2.8%. Economists surveyed by Dow Jones had expected a 0.3% monthly increase and a 2.7% year-over-year rise. The core PCE is seen as a better gauge of long-term inflation trends, making this higher-than-expected increase notable.
In the broader all-items PCE measure, the index rose 0.3% month-over-month and 2.5% from the previous year, both figures in line with analysts’ forecasts.
Consumer Spending Lags Expectations
At the same time, the report showed that consumer spending increased by 0.4% in February, which was slightly below the forecasted 0.5% gain. However, personal income saw a stronger-than-expected increase of 0.8%, surpassing the 0.4% forecast.
The report revealed mixed signals, with inflation pressures remaining elevated while consumer spending grew at a more modest pace than anticipated.
Market Reactions and Fed Considerations
Following the release of the data, stock market futures and Treasury yields moved lower. The Federal Reserve closely monitors the PCE inflation measure as it provides a broader view of inflationary trends, adjusting for changes in consumer behavior and placing less emphasis on housing compared to the Labor Department’s consumer price index (CPI).
This data will likely influence future discussions by the Federal Reserve as it continues to assess inflation dynamics and make decisions regarding interest rate adjustments.
Editorial Team
Reporter at Coindoo
Source: https://coindoo.com/us-pce-data-about-inflation-and-consumer-spending-data-disappoint-in-february/