The Federal Reserve’s priority inflation measure, the Personal Consumption Cost (PCE) Price Index, rose 2.5% per year in January, matching economists’ expectations and reassured right after the expected inflation data earlier this month.
PCE indices, such as consumer price indexes, and other inflation criteria measure price changes over time in a typical basket of goods and services.
By numbers
According to an economist voted by financial data firm FactSet, the numbers for January predict that PCE rose 2.5% per year.
Inflation has plummeted from its peak of about 9% from its recent peak in June 2022, but remains above the Fed’s target of driving to 2% per year. Today’s PCE data follows the heels of the latest CPI reports. Accelerated in January Up to 3% per year.
What the economist says
The PCE report shows that inflation “provides some relief after a series of economic reports suggesting that it has risen at a mild pace in January and is intensifying again.”
A recent Sticky CPI report bolsters the Fed’s decision in January Pause With the reduction in additional fees, today’s data suggests that central banks could cause more cuts than they did this year. It added, “the idea of ​​multiple rate reductions in 2025 may be overly optimistic based on today’s data.”
Many consumers have also expressed stubborn concern about inflation. I’m not walking my income With inflation. Some polls discovered by the vote have expressed concern about their ability to store or buy extras.
According to several recent measures, consumer sentiment has become sour amidst stubborn inflation and other headwinds. “The University of Michigan’s indicators of consumer sentiment towards democratic consumers have plummeted to its lowest since the economic collapse in February 2008,” Bill Adams, chief economist at Comerica Bank, said in an email.
He added: “Consumers worried about tariffs, Doge cuts and fears of deportation seem to be pulling back discretionary spending.”
