While the Federal Reserve hopes to be ending their interest rate hikes in the coming future, the latest personal consumption expenditure (PCE) index from the Bureau of Economic Analysis—the Federal Reserve’s favored measure of inflation—demonstrates that inflation still persists.
The Bureau’s latest data found that the PCE index increased $27.9 billion (0.2%) in February. While still only a minor increase, it breaks the two-month streak of decreases seen in January and December.
The Bureau stated that the increase in the PCE index reflected an increase of $25.8 billion in spending for services and an increase of $2 billion in spending for goods. The services spent most on were housing and health, while spending on food and accommodations declined. The goods spent most on were gasoline, energy, pharmaceuticals, and food and beverages, while spending on motor vehicles and parts decreased.
Meanwhile, the Bureau found that the real PCE decreased 0.1%, reflecting a decrease of 0.1% in spending on goods and services.
In addition, the Bureau’s data indicated that personal income also increased $72.9 billion (0.3%) in February. This increase was led by an increase in compensation in the service-producing and government industries.
The PCE price index for February increased by 0.3%, according to the Bureau’s data, and increased 0.3% excluding food and energy. Prices for goods increased 0.2%, services increased 0.3%, food increased 0.2% and energy decreased 0.4%. The index has risen 5% from this time last year.
In inflation news, the Fed recently announced another rate hike, although more modest in nature than other recent hikes, to assist in their goal that began last March to reel in inflation. Following the announcement, a statement from officials hinted at the end of rate hikes soon.
“The committee anticipates that some additional policy firming may be appropriate,” the statement said. The sentiment is much opposed to the eight recent statements indicating rate hikes were appropriate.
For the full report, including data tables, click here.