summary
The Fed’s favorite inflation indicator, the PCE Price Index, will be released by BEA this morning. Unlike the well-known consumer price index, it is faster to reflect real-time pricing fluctuations, as indexes change more frequently. In a January report, PCE inflation rose 2.5% year-on-year. The latest CPI report (February) saw an increase in inflation by 2.8%. Core PCE, which removes volatile food and energy prices, rose by 2.6% in the recent month. Our PCE forecasts require a steady February drop measurement, as prolonged inflation remains a challenge with certain sticky prices services. Overall, inflation in this cycle peaked in the summer of 2022 and has been on a fairly consistent downward trek since then. Track 20 inflation measures each month. On average, they show that prices are rising at a rate of 3.15% year-on-year, essentially flat one month ago. The numbers are volatile and are skewed by swings within the volatile producer price inflation report. Focus on core inflation – Core CPI, market-based PCE Ex-Food & Energy, inflation expectations rates from 5 years ago, 10 years of tips are obtained by averaging the broken interest rates and core PCE price index – Readings are 2.60%, lower at 5-based POI
