In March, the Personal Consumption Expenditures (PCE) Index rose 0.7%, up from 0.4% in February. On an annual basis, PCE increased by 3.5%, the highest since May 2023 and up from 2.8% in the prior month. Both figures were in line with their consensus estimates.
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Trade QQQ with leverageRising energy costs were largely responsible for the acceleration, with consumers spending $81.3 billion more on gas and other energy goods month-over-month. Prices at the pump have surged 44%, or $1.32, to $4.30 since the beginning of the U.S.-Iran war on February 28. Spending on health care and motor vehicles also contributed to the growth.
Core PCE Holds Above Fed Target
Core PCE, which excludes volatile food and energy prices, notched a monthly increase of 0.3% and a year-over-year jump of 3.2%, the highest since November 2023. Both figures matched their respective estimates. PCE tracks changes in the prices consumers pay for goods and services over time, while core PCE is the Fed’s preferred gauge of inflation.
The data shows that even when excluding energy, inflation remains above the Fed’s 2% target. On Wednesday, the central bank voted to keep interest rates unchanged as it continues its efforts to curb price pressures.