The Fed’s favourite inflation gauge in January rose in line with expectations, according to the numbers released on Thursday by the Commerce Department’s Bureau of Economic Analysis.
In January, the personal consumption expenditures price index, which excludes food and energy, rose 0.4% from last December and 2.8% from a year ago. The increase in prices was in line with expectations according to the Dow Jones consensus, but higher from 0.1% monthly gain in December 2023 and 2.9% from December 2022.
Meanwhile, headline PCE, which includes the volatile food and energy prices, increased 0.3% for the month and 2.4% from last year, also in line with estimates as well, but the annualized growth was higher from 2.6% in December.
The rise was expected amid an increase in personal income, which rose 1%, well above the forecast for 0.3%.
The PCE figures in January is still above the Fed’s 2% inflation target, even though the core prices on an annual basis was the lowest level since February 2021.
Odds for the Fed’s first rate cut remained in June even since before the data came. It was pushed back further from March as the U.S. showed stronger economic growth amid persistent inflation above the target.
