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Core Inflation Moderating
Though the path to lower inflation has been somewhat bumpy, the trend in Core PCE (Personal Consumption Expenditures), the Fed’s preferred measure of inflation, continues downward. Year-over-year growth in Core PCE declined to 2.8% in February. The reading was aligned with economists’ expectations following the CPI report earlier in March which exceeded expectations. Core services excluding energy & shelter decelerated significantly to 0.18% for the month. The reading was down from 0.66% for January and more in line with disinflationary trends that prevailed from May 2023 to Dec 2023. Core PCE is now significantly below the 5.50% upper range of the Fed Funds target rate.
Source: Bloomberg
