9 April 2026
If you are covering the latest US PCE price index data, please see the following comment from Lindsay James, investment strategist at Quilter:
“Today’s PCE inflation figures offer a snapshot of the US economy at a pivotal moment, capturing conditions before the outbreak of war in the Middle East and the subsequent surge in oil prices began to rapidly alter the outlook.
“Headline PCE inflation held steady at 2.8% on an annual basis in February, while the monthly reading edged up to 0.4% from 0.3%. Core PCE, the Federal Reserve’s preferred inflation gauge, eased slightly to 3.0% year on year from 3.1%, although the monthly measure rose to 0.4%, which may reinforce the Fed’s cautious stance and could further strengthen the dollar.
“The accompanying personal income and spending data also shows income growth has become far more muted, falling by 0.1% month on month. Meanwhile, consumer spending came in lower than expected, rising by just 0.1% compared to 0.4% previously.
“While continued positive consumption numbers are supportive for near-term economic growth in a consumer-led economy like the US, the slowdown - coming before the war - adds to likely White House pressure on the Fed to cut rates despite evident inflationary threats. What’s more, with income growth falling and spending barely rising in real terms, it seems households are starting to live effectively on borrowed time and may increasingly need to draw on unsustainable sources such as savings, asset wealth or credit to fund expenditure.
“Given the significant market and geopolitical developments not captured in this data, today’s release will likely reinforce the Fed’s ‘wait and see’ approach. However, the GDP estimate for Q4 has been revised down further to 0.5%, having already been cut from 1.4% to 0.7%, so it will be keeping a close eye on growth.”
