US March PCE Inflation Cools to 2.3% Year-Over-Year, Core Index at 2.6%; Consumer Spending Surges

US inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, slowed more than expected in March, rising 2.3% year-over-year compared to February’s 2.7%. This reading was slightly above the consensus forecast of 2.2%, signaling continued, though moderating, price pressures. The core PCE price index, which strips out volatile food and energy costs and is closely watched by the Federal Reserve, increased 2.6% over the past year-matching analyst expectations and down from 3.0% in February.

 

On a monthly basis, both the headline and core PCE indices were unchanged, following a 0.4% and 0.5% increase, respectively, in February. The data suggest that inflation is gradually moving closer to the Fed’s 2% target, even as consumer spending remains robust. March saw a notable 0.7% jump in spending, the largest monthly gain in over two years, as Americans accelerated purchases ahead of new tariffs.

 

Despite the cooling inflation, economists caution that upcoming tariff implementations could reignite price pressures in the coming months. The Federal Reserve is expected to closely monitor these trends as it weighs its next policy moves.

 

Source: Reuters