2023-04-28 14:59:20
The core personal consumption expenditures price index (PCE), the Fed’s closely watched measure of inflation, rose once more in March despite the Federal Reserve raising interest rates nine times in the past year. The data showed that the core PCE in March, excluding food and energy, increased by 0.3% month-on-month, in line with Dow Jones’ expectations, with an annual increase of 4.6%, down 0.1 percentage points from February, and higher than the expected 4.5%.
CNBC reported that the overall PCE, including food and energy, increased by 0.1% month-on-month and 4.2% year-on-year, a sharp decline from 5.1% in February. The data will reach a peak of around 7% in June 2022, the highest since December 1981 highest point.
Overall PCE was moderated by a 3.7% month-on-month drop in energy prices, while food prices fell 0.2%, commodity prices fell 0.2%, and service prices increased 0.2%.
The Fed’s other key measure of inflation, the Employment Cost Index (ECI), rose 1.2% in the first quarter, higher than the 1.1% in the fourth quarter of last year and the expected 1%. The annual growth rate of 4.8% was down from 5.1% at the end of last year.
Inflationary pressures are reflected in consumers’ willingness to maintain spending. Personal income rose 0.3% month-on-month in March, but consumer spending was flat, in line with expectations.
While PCE annual growth is well below the 2022 peak, it is still well above the 2% target, further evidence that price increases are firmer than policymakers expected.
The Fed has raised interest rates nine times since March 2022, bringing the rate to 4.75 percentage points. The FOMC is widely expected to raise rates by another 0.25 percentage point at its meeting next week. Free Times 0428
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