(Reuters) – Prices increased in line with expectations in February in the United States, encouraging data for the Federal Reserve, now more attentive to developments in the economy as a whole.
These data which confirm the slowdown in price dynamics “are in the trend of what we want to see”, declared the President of the Fed, Jerome Powell, who spoke from the San Francisco Fed.
The last two inflation indicators were higher than expected in the United States.
Stressing that other encouraging data was needed, the monetary policy official clarified that it was no longer relevant to think only in terms of inflation.
“We are now thinking about both the risks to employment and inflation,” said Jerome Powell.
PCE INFLATION
Data released Friday by the Commerce Department showed that the PCE consumer price index rose 0.3% in February, compared with a 0.4% rise in January (revised from 0.3%). Over one year, the index increased by 2.5%, compared to 2.4% in January.
Economists polled by Reuters expected on average an increase in the PCE index of 0.4% over one month and an increase of 2.5% year-on-year.
The basic “core PCE” inflation index, which excludes the volatile elements such as energy and food products, increased by 0.3% in February, compared to an increase of 0.5% in January (revised of 0.4%).
Over one year, the index rose to 2.8%, compared to an increase of 2.9% (revised from 2.8%) recorded in January.
Household consumption appears stronger than expected, stimulated by the slowdown in inflation.
Consumer spending by American households increased by 0.4% in February, compared to a decline of 0.2% in January (revised from -0.1%). On an adjusted basis, overall consumer spending rose 0.8% last month, following a 0.2% rise in January.
The PCE index is the indicator used by the Fed to judge whether its inflation target is being achieved.
(Written by Corentin Chappron, edited by Sophie Louet)
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