US PCE Inflation Picks Up in February, Consumer Spending Solid

• U.S. inflation increased as expected in February and likely rose further in March amid the war with Iran, a trend that is expected to discourage the Federal Reserve from cutting interest rates for a while. The personal consumption expenditures (PCE) price index ​climbed 0.4% after an unrevised 0.3 gain in January, the Commerce Department's Bureau of Economic Analysis (BEA) said ‌on Thursday. Economists polled by Reuters had forecast the PCE price index rising 0.4%.
• In the 12 months through February, PCE inflation advanced 2.8% after increasing by the same margin in January.
• The BEA is still catching up on data releases following delays caused by last year's government ​shutdown. Inflation was already elevated before the war, largely because of President Donald Trump's import duties. The U.S.-Israel ​war with Iran boosted global oil prices and sent the national average gasoline retail price soaring ⁠above $4 per gallon for the first time in more than three years.
• Economists expect the inflation fallout from the ​conflict, which started at the end of February, would be more pronounced in March's data. Trump on Tuesday announced a ​two-week ceasefire on condition of Tehran reopening the blockaded Strait of Hormuz, which has also affected shipments of fertilisers and other goods. The disruptions are expected to raise food prices.
• Excluding the volatile food and energy components, the PCE price index increased 0.4% in February, rising by the same ​margin for a third straight month. In the 12 months through February, core PCE inflation advanced 3.0% following a ​3.1% increase in January.
• The slowdown in year-on-year core PCE inflation reflected last year's high readings dropping out of the calculation.

(Source: Reuters)