Markets are closed but the latest inflation report has been released

A key inflation gauge watched closely by the Federal Reserve climbed on an annual basis in Feb.  The Commerce Dept's personal consumption expenditures price index (PCE) headline figure rose 2.5% last month, in line with expectations.  On a monthly basis, prices rose 0.3%, slightly below the estimate.  Excluding food & energy, core PCE prices rose 2.8% annually in Feb & 0.3% from the prior month.  Both figures were in line with expectations & the year-over-year figure is slightly lower than Jan's reading of 2.9%.  The Jan monthly core PCE reading was revised upward from 0.4% to 0.5%.  For inflation to return to the Fed's 2% year-over-year target, monthly inflation readings over 0.2% are necessary over time to lower the headline rate.  Consumer spending spiked 0.8% last month, up from the 0.2% increase in Jan.  That figure came in higher than the 0.5% increase projected.  The report found that prices for goods rose by 0.5% from Jan while prices for services ticked up by 0.3%.  On a monthly basis, food prices increased 0.1% & energy prices rose by 2.3%.  Compared to the same month a year ago, prices for services increased 3.8% while goods decreased by 0.2%.  Food prices were up 1.3% & energy prices declined by 2.3% from last year.  Federal Reserve officials held a policy meeting last week and left the central bank's federal funds rate unchanged at 5.25% - 5.50%.  The Fed has raised the benchmark rate, which influences interest rates for mortgages, loans & credit cards, by 525 basis points since Mar 2022.  Inflation hasn't subsided as quickly as policymakers had expected, which prompted the Fed's decision to leave interest rates unchanged.  Stubborn inflation has lowered expectations that there may be as many as 6 interest rate cuts this year, although a smaller number of cuts are still projected.

Key Fed inflation gauge, consumer spending soars in February

 

The data above shows that the current inflation report shows a continuation of the numbers that have been reported in recent months.  Investors will be able to evaluate the meaning of this information before trading resumes on Mon.

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