One of the US Fed’s favoured measures of inflation is core personal consumption expenditure (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 core PCE figures have been published by the Bureau of Economic Analysis as part of March figures for personal income and expenditures. At -0.1% for the month and 1.6% year on year, the numbers fell from February’s comparable figures of +0.2% and 1.8% (after revisions) and were as ANZ put it “the largest monthly fall since 2001”. Janu Chan, a senior economist at St George Bank said the figures are reminder of why wariness is sometimes required. “It justifies some of the caution among some Fed officials regarding whether the inflation pickup late last year was sustainable.”
