US PCE Inflation Holds Steady at 2.5% in February, Core Index Surpasses Expectations

In February, the U.S. maintained its annual inflation rate at 2.5%, as reflected in the Personal Consumption Expenditures (PCE) Price Index, according to data released by the Bureau of Economic Analysis.

This figure matched both market expectations and January’s result.

The core PCE index, which excludes volatile food and energy prices, saw a 2.8% year-over-year increase, surpassing the forecast of 2.7% and outpacing the previous month’s 2.7%. On a month-to-month basis, the overall PCE index rose by 0.3%, while the core index grew by 0.4%.

Further details showed that personal income climbed by 0.8% monthly, while personal spending grew by 0.4%.

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Market reactions to this data were swift, with the U.S. dollar gaining strength against major currencies. At the time of reporting, the USD Index had risen by 0.12%, reaching 140.40. Among the major currencies, the USD performed particularly well against the Japanese Yen.

This report came ahead of a broader market expectation that the Federal Reserve will keep interest rates steady in May, with a continued focus on monitoring inflationary trends. The core PCE is expected to rise by 0.3% month-over-month and 2.7% year-over-year for February, while overall inflation should remain at 2.5%.

Alexander Stefanov