The Federal Reserve’s preferred inflation gauge measured above expectations in March as the U.S. continues to see a surge in prices, among other concerning economic data, according to data from the Bureau of Economic Analysis (BEA) released Friday.

The personal consumption expenditure (PCE) price index surged 0.3% in March, totaling 2.7% for the year and up from 2.5% in February, according to the BEA. The March PCE report adds to other recent concerning economic data, such as a report from the BEA on Thursday showing economic growth slowed to just 1.6% in the first quarter of 2024.

The PCE price index, which the Fed looks primarily to in determining inflation trends in order to set monetary policy, was slightly lower than the consumer price index (CPI), another measure of inflation. CPI measured 3.5% in March year-over-year, surging up from 3.2% the month before, far from the Fed’s 2% target.

“While inflation has fallen more than 60% from its peak, today’s report reinforces the importance of our ongoing work to bring costs down,” Lael Brainard, National Economic Advisor, said in a statement following the PCE report. “President Biden is fighting to lower the biggest bills families face.”

The U.S. has seen persistently elevated rates of inflation since retreating from a high of 9% under President Joe Biden in June 2022, declining to 3.1% in June 2023, and staying above 3% ever since, according to the Federal Reserve Bank of St. Louis.

The core PCE price index, which excludes the volatile categories of food and energy, was even higher, increasing 0.3% in the month and 2.8% in the year. Increases in the PCE price index were led by a 1.1% month-over-month increase in spending on goods, while services only increased by 0.2%.

Economists had expected the PCE price index to increase to 2.6%.


High readings of inflation cast doubt on the Fed cutting its federal funds rate in the coming months, with a majority of investors now not predicting a rate cut until September, according to CME Group’s Fed Watch Tool. The Fed has currently set its federal funds rate to a range of 5.25% and 5.50%, the highest in 23 years, in an attempt to bring the pace of inflation down.

Fed Chair Powell warned in a press conference immediately following the Federal Open Market Committee’s rate decision in March to not dismiss recent high inflation data, even if it is not convenient to the rate cut narrative desired by Wall Street. The Fed’s next rate decision is expected on May 1.

The White House deferred the DCNF to the Brainard’s statement.

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