The latest reading of the Fed’s preferred inflation gauge showed inflation eased in March as investors brace for an uptick in pricing pressures following the implementation of President Trump’s tariff agenda.
The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, came in flat over the prior month, above expectations of a 0.1% increase and slower than the revised 0.5% increase seen in February.
Core PCE was up 2.6% over the prior year in March, in line with estimates and also ahead of February’s upwardly revised 3% increase.
In the all-items measure, the price index came in flat month over month and rose 2.3% from a year ago, both roughly in line with forecasts. February’s yearly price index reading was revised up to 2.7% from the prior 2.5%.
At the same time inflation in the first quarter clocked in hotter than expected, according to an earlier Bureau of Economic Analysis (BEA) report. The “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 3.5% in the first quarter, above estimates for 3.2% and above the 2.6% seen in the prior quarter.
Separately, the BEA said consumer spending accelerated 0.7% for the month, above the 0.6% forecast. That came as personal income posted a 0.5% rise, against the estimate for 0.4%.
