29 February 2024
If you are covering the latest US PCE data, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“The Fed’s preferred inflationary gauge, core personal consumption expenditure, known as the PCE deflator, has been published in the US showing that on a month-on-month basis it is running at 0.4% and 2.8% on an annual basis. This is the fastest pace of month-on-month price growth in the past year, though on an annual basis it is an improvement on the 2.9% recorded last month.
“While this was largely anticipated, given recent signals from CPI data, it underlines how sticky inflation has become in the services sector, while goods are largely seeing prices falling back. Housing costs continue to be a key driver, alongside household utilities, healthcare, recreation and financial services - by no means a short list. With the Federal Reserve at pains to deliver a data dependent message, while also acknowledging rate cuts are nearing, it seems that the last mile is providing difficult for core inflation figures despite lower energy prices helping bringing headline inflation data closer to target more quickly. While market expectations for rate cuts to begin in June are unlikely to change, the months ahead will need to show clearer signs that core inflation is falling sustainably.”
