News comes as trade policy looks set to increase prices
The U.S. Federal Reserve’s preferred inflation measure rose more than anticipated in February, while consumer spending came in lower than forecast, according to new data released Friday by the U.S. Department of Commerce.
The core personal consumption expenditures (PCE) price index—which strips out volatile food and energy prices—climbed 0.4% month-over-month, pushing the annual inflation rate to 2.8%. Economists polled by Dow Jones had predicted increases of 0.3% for both the monthly and yearly readings.
Core PCE is often viewed as a more accurate reflection of long-term inflation trends due to its exclusion of short-term price volatility.
The broader, all-items PCE index rose 0.3% in February and 2.5% compared to a year ago, aligning with consensus estimates.
Meanwhile, the U.S. Bureau of Economic Analysis reported that consumer spending rose by 0.4% during the month, slightly below the expected 0.5% increase. At the same time, personal income grew by 0.8%, doubling economist forecasts of 0.4%.
Officials at the U.S. Federal Reserve closely monitor the PCE index, as it is considered a more comprehensive inflation measure. Unlike the U.S. Labour Department’s Consumer Price Index (CPI), the PCE accounts for shifts in consumer purchasing patterns and gives less weight to housing costs.
