U.S. PCE price inflation slowed in February

According to the most recent monthly update of the Federal Reserve’s favoured inflation indicator, consumer prices increased less in February than anticipated.

Compared to the 0.3% forecast, the price index for core personal consumption increased by only 0.2% in February, slowing from a 0.5% gain in January that had been downwardly revised.

As a result, the annual increase in core PCE prices decreased slightly to 4.6% from 4.7%, marking its lowest level since the end of 2021.

The numbers may go some way to persuading the Fed that it no longer needs big interest rate hikes to keep inflation in check. Headline core PCE inflation has been on a downward trend for a full year now, but is proving to be more stubborn than the Fed had expected while the U.S. was still suffering from pandemic-related disruption.