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The US recorded a 0.3% growth in its personal consumption expenditure price index in January 2024, conforming to the anticipated market predictions of 0.3%. This marginally increased compared to an adjusted 0.1% surge experienced the previous month, December. Service prices experienced a 0.6% rise while goods showed a 0.2% decrease. The year-on-year growth rate declined to 2.4%, recording the lowest since February 2021, down from 2.6% of the previous month and aligning with the predicted 2.4%.  

At the same time, the monthly core PCE inflation, which rules out food and energy and is a preferred measure of inflation by the Fed, modestly rose to 0.4%, marking the most significant hike since last February and surpassing an adjusted 0.1% rise seen in December, thus coinciding with predictions. Concurrently, there was a 0.5% surge in food prices and a 1.4% drop in energy prices.  

The core services ex housing inflation, rose 3.45% year-over-year and 0.6% month-over-month in January. The Federal Reserve pays close attention to this measure. Both the annual and monthly increases were substantially higher than in recent months, with the 0.6% monthly gain marking the largest rise since March 2022. Every component of the Super Core Personal Consumption Expenditures index accelerated in January, driven mainly by faster inflation in the services sector. 

To conclude, the annual core inflation rate saw a reduction for the 12th consecutive month to 2.8% from 2.9%, hitting a new record low since March 2021, and tallying with the anticipated 2.8%. 

This is the final PCE report that Federal officials will have access to prior to the monetary policy meeting scheduled for the 19th and 20th of March. The Federal Reserve’s Chairman, Jerome Powell, along with other officials, has essentially dismissed the possibility of a rate cut during this meeting. Consequently, a majority of investors are now shifting their expectations towards June for a likely rate decrease. 

(PCE Price Index MoM) 

(Core PCE Price Index MoM) 

(Core PCE Price Index YoY) 

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