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The Fed’s Key Inflation Gauge Rose 0.3% In March



The Fed's Key Inflation Gauge Rose 0.3% In March

(CTN News) – While interest rates have been raised over the past year, inflation rose again in March, according to the latest economic data released Friday that the Federal Reserve closely monitors.

According to the Dow Jones estimate, the personal consumption expenditures price index excluding food and energy rose 0.3% for the month, in line with what analysts expected.

It is worth mentioning that on an annual basis, the so-called core PCE increased 4.6%, slightly higher than the expectations of 4.5% and lower by 0.1 percentage point than the month before.

The headline PCE for the month of March increased just 0.1%, reflecting a 4.2% increase in the annual level, compared to the 5.1% increase in the month of February, which represents a significant drop from the 5.1% increase in February.

In June 2022, this measure reached a peak of around 7%, which is the highest level since December 1981 when the measure peaked out.

In spite of the weak headline number, the core number remained more positive due to a 3.7% decline in energy prices and a 0.2% decrease in food prices.

There was a 0.2% decline in the prices of goods, while a 0.2% increase in the prices of services.

As part of another key measure of inflation, the employment cost index rose by 1.2% for the first quarter, one percentage point higher than the 1% estimate in the Fed’s previous report.

Consumers continued to spend despite Inflation pressures, which was reflected in their willingness to keep spending throughout the year.

Consumer spending remained flat for the month, as is expected, as personal income rose 0.3% for the month.

The rates of inflation are still well above the central bank’s 2% target for the year and further evidence that price increases are proving to be more stubborn than policymakers had expected, even though they are below the peaks reached in 2022.

A total of 4.75 Inflation percentage points have been raised by the Federal Reserve since March 2022 for a total of nine increases in the benchmark interest rate.

There is a consensus among market observers that the Federal Open Market Committee, which sets interest rates, will approve another quarter percentage point hike at next week’s meeting, before it pivots to see just what effect the tightening policy is having on the $26.5 trillion economy in the U.S.


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