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 February figures for personal income and expenditures report. At 0.2% for the month, core PCE inflation was in line with the market’s expectation but lower than January’s 0.3% increase.
Annual core PCE inflation has been in range of 1.3% to 1.6% since March 2017. The latest reading for annual core PCE was 1.6%, thus at the top of this range and higher than January’s comparable figure of 1.5%.
