What's In An Index? CPI Vs. PCE

2025-02-28 19:30:00 ET

Summary

• Happily for all of us worried about inflation’s recent stickiness, the PCE numbers for January were right in line with expectations.
• Significantly, the year-on-year gain in core PCE, which excludes the volatile categories of food and energy, fell to 2.6 percent from 2.9 percent last month.
• Investors were relieved to see the PCE in line with expectations; a hotter reading probably would have knocked out whatever good feelings remained after a tough week.

Inflation is back at the top of the list of economic concerns felt by everyone from the voting members of the Federal Open Market Committee, to portfolio managers trying to figure out target maturities for their bond allocations, and to families dreading the next trip to the grocery store....

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