The Fed’s preferred inflation gauge just moved in the wrong direction
CNN
Inflation remained stubbornly high last month, but it hasn’t stopped Americans from spending.
Inflation remained stubbornly high last month, but it hasn’t stopped Americans from spending. The Personal Consumption Expenditures price index — a closely watched inflation gauge favored by the Federal Reserve — accelerated to 2.7% for the year ended in March, according to data released Friday by the Commerce Department. That rate was above economists’ expectations for a 2.6% gain and landed above February’s reading of 2.5%. Prices for services — specifically housing, health care and transportation — are applying upward pressure to overall inflation, Commerce Department data shows. “This wasn’t the data the doctor ordered for Fed officials looking for confidence that inflation was back on a downward path,” wrote Christopher Rupkey, chief economist at FwdBonds, in a note issued Friday. While many economists prefer to measure the nation’s inflation levels using the monthly Consumer Price Index, the Fed bases its 2% inflation target on the overall PCE index.
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