On Friday, the Commerce Department reported that consumer spending rose by the most in a year last month, demonstrating the economy's resiliency. Strong labor market performance helps the US outperform its global peers despite increased borrowing prices.
Last month, the Commerce Department's Bureau of Economic Analysis reported a 0.3% increase in PCE prices. January PCE price index data was revised up to 0.4% from 0.3%. The PCE pricing index was expected to rise 0.4% on the month by Reuters economists.
Gasoline and other energy prices jumped 3.4% last month, raising goods prices 0.5%. Recreational products, automobiles, apparel, and footwear prices rose sharply. However, costs for durable products like furniture and appliances were low.
From the first half of last year, price pressures have reduced, but inflation remains above the U.S. central bank's 2% objective. Friday, Fed Chair Jerome Powell said February's inflation report was "more along the lines of what we want to see."
Policymakers expect three rate decreases this year. Financial markets anticipate the first rate cut in June. Most U.S. financial markets were closed on Good Friday, except for the foreign exchange market. Data shows the dollar fell versus a basket of currencies.
After climbing 2.9% in January, core inflation rose 2.8% in February, the smallest increase since March 2021. The Fed watches PCE prices for monetary policy. To return inflation to target, monthly inflation must be 0.2%. Due to various weights, the PCE price data did not match some of the tougher consumer and producer pricing reports, but some stickiness remained.
After rising 0.6% in January, services prices rose 0.3%. Housing and utilities cost 0.5% more. Recreation, finance, and insurance prices rose significantly. Restaurant, hotel, and motel prices were steady, but transportation and healthcare rose somewhat.
Last month, PCE services inflation excluding energy and housing rose 0.2% after rising 0.7% in January. The super core rose 3.3% year-over-year after 3.5% in January. Super core data are used to evaluate policymakers' inflation combat.
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