The Federal Reserve’s preferred inflation gauge raced to its highest level since the early 1980s last month, data from the Bureau of Economic Analysis indicated Thursday.
The Federal Reserve’s preferred measure of U.S. inflation accelerated to a fresh four-decade high last month, data indicated Thursday, as energy price surges and a pick-up in incomes added to price pressures in the world’s biggest economy.
The February core PCE Price Index rose 5.4% from last year, the highest since 1983, and 0.4% on the month, the Bureau of Economic Analysis reported, a figure that was largely in line with Wall Street forecasts but still adding to investors concerns about the ongoing upward inflationary pressures. The January increase was 0.5%.
The headline PCE index was up 0.6% on the month and 6.4% on the year, the highest since 1980. Personal income rose by the expected pace of 0.5%, while personal spending rose 0.2%, the BEA noted, firmly shy of the Street consensus forecast.
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U.S. stocks were little-changed following the data release, with futures contracts tied to the Dow Jones Industrial Average indicating a 40 point opening bell decline and those linked to the S&P 500 priced for a modest 1.5 point dip.
Benchmark 10-year note yields eased to 2.318% while the dollar index was pegged 98.129 against a basket of six global peer currencies.
The CME Group’s FedWatch is indicating a 66.6% chance of a 50 basis point rate hike next month, up from just 16% at the beginning of March, with bets on a follow-on hike of 50 basis points in June pegged at 60.5%.
U.S. inflation accelerated to the fastest pace in four decades again last month, data from the Bureau of Labor Statistics indicated Thursday, with the recent surge in oil and gas prices linked to Russia’s war on Ukraine likely to keep rates elevated well into the second half of the year.
The headline consumer price index for the month of February was estimated to have risen 7.9% from last year, up from the 7.5% pace in January and the fastest rate since June of 1982, powered largely by energy, shelter and services costs. On a monthly basis, inflation was up 0.8%, the BLS said, with both tallies matching Wall Street forecasts.
