The Fed’s preferred measure of inflation surged in March to its highest level since 1981. However, the data showed that the increase was mainly due to soaring natural gas costs, and there are signs that huge price pressures may be starting to ease.
The Commerce Department said on Friday (29th) that the annual increase in the U.S. PCE price index in March climbed to 6.6% from 6.4% in February, the largest increase since 1981, but this value was lower than the expected 6.7% %. The monthly increase in PCE was 0.9%, in line with expectations, and the previous value was 0.6%.
However, the core PCE, which strips out volatile food and energy costs, rose just 0.3% in March for the second straight month, in line with Wall Street forecasts.
The annual increase in core PCE also slipped to 5.2% from 5.3%, the first month-on-month decline in more than a year.
The Fed sees the PCE index as the most accurate measure of U.S. inflation, especially the core PCE. It’s more comprehensive and takes into account when consumers are replacing more expensive items with cheaper ones.
The Federal Reserve is preparing to accelerate monetary tightening to combat soaring inflation, but economists say it will take time to rein in inflation.
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