One of the US Fed’s favoured measures of inflation is the change in the core personal consumption expenditures (PCE) price index. After hitting the Fed’s target at 2.0% in mid-2018, the annual rate then hovered in a range between 1.8% and 2.0% through to the end of 2018 before dropping in the first quarter of 2019. Since then, the annual rate has stayed around 1.5%.
The latest figures have now been published by the Bureau of Economic Analysis as part of the June personal income and expenditures report. Core PCE inflation was +0.2% for the month, the same rate as in May and April but less than the 0.3% increase which had been expected. On a 12-month basis, the core PCE inflation rate ticked up to 1.6% after May’s annual rate was revised down to 1.5%.
ANZ economist Jack Chambers said, “The three-month annualised rate of core PCE is 2.4%, up from 0.6% in Q1 (the March quarter), signalling that the period of low inflation at the start of the year has passed.”