One of the U.S. Fed’s favoured1 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 PCE figures have been published by the Bureau of Economic Analysis as part of the January figures for personal income and expenditures report. At 0.3% for the month, core PCE inflation was in line with the market’s expectation but higher than December’s 0.2% 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 unchanged at 1.5% and thus the same as comparable figures for November and December.