Washington, D.C. — Recent data shows a mixed picture for inflation, following significant upward revisions in previous months. The core Personal Consumption Expenditures (PCE) price index for February has now settled at 3.0%, marking the highest rate in a year, with a notable increase for core services fueling this adjustment.
The revisions reveal a sharp uptick for February’s month-to-month figures, primarily influenced by the robust performance of core services. The overall PCE increased by 0.44%, an annualized rate of 5.5%, revising up from an earlier estimate of 0.33%. Core PCE rose to 0.50% for February, equating to a 6.1% annualized rate, surpassing the initial projection of 0.37%. Similarly, core services inflation saw a rise to 0.52%, representing an annualized rate of 6.5%.
Year-over-year comparisons also reflect higher figures, with the overall PCE now at 2.7%, an increase from the previously reported 2.5%. The core PCE tracks at 3.0%, climbing from an earlier 2.8%, underscoring persistent inflationary pressures.
In March, the overall PCE price index showed a slight decline of 0.04%, thanks largely to a significant drop in energy prices. The energy index fell by 2.7% month-to-month, which contributed to the overall decrease. In contrast, the core PCE indicates a growing year-over-year inflation rate of 2.6%, illustrating ongoing challenges in the economic landscape.
The six-month PCE price index slowed to 2.9%, down from the up-revised 3.4% recorded in February, hinting at a deceleration in inflationary pressures. Meanwhile, the core PCE index, which excludes volatile food and energy prices, slowed to just 0.03% in March, representing a stark shift from the January peak.
Housing costs have become a significant contributor to inflation, with the PCE price index for housing recording its largest monthly increase since August 2024. The index surged by 0.39%, equating to an annualized rate of 4.8%, highlighting the pressures consumers face in the housing market.
Durable goods prices exhibited a slight decline in March, falling 0.05%. Despite a recent upward trend, March’s negative reading suggests volatility in this category, which is critical for gauging consumer purchasing trends. Durable goods encompass a range of items, from automobiles to consumer electronics, many of which face additional costs related to global supply chains.
Food and beverage prices also climbed, increasing by 0.46% in March and revealing a year-over-year rise of 2.0%. This increase follows a pattern of fluctuating prices since the previous year, indicating ongoing pressures on consumers.
Overall, energy prices showcased a notable drop, decreasing by 2.7% month-to-month and falling 5.6% year-over-year. This volatility emphasizes the need for core inflation measures that exclude these categories to gain clearer insight into underlying price trends affecting the economy.
As inflation data continues to unfold, economic observers remain focused on these trends, seeking indicators that might signal shifts in monetary policy or consumer behavior in the coming months.