One of the U.S. Fed’s favoured measures of inflation is the change in core personal consumption expenditures (PCE). The core version of consumer spending strips out energy and food components, which are volatile from month to month, in an attempt to identify the prevailing trend. It’s not the only measure of inflation used; the Fed also tracks the Consumer Price Index (CPI) and Producer Price Index (PPI) from the Department of Labor.
The latest PCE figures have been published by the Bureau of Economic Analysis as part of the March figures for personal income and expenditures report. At 0.2% for the month, core PCE inflation was in line with market expectations and the same as February’s figure, but only after rounding.
After the figures were released ANZ senior commodities analyst Daniel Hynes said, “Overall, inflation appears to be normalising with the period of transitory weak inflation last year having dropped out.”
Annual core PCE inflation has been fluctuating between 1.3% and 1.6% since March 2017 but this latest reading took it outside this range. Annual core PCE recorded 1.9%, up from February’s comparable figure of 1.6% and January’s 1.5% and only just below the US Fed’s stated 2.0% target.