USA: inflation rebounds over a year in February, slows down over a month (PCE index, favored by the Fed)

Chocolate bars are displayed on the shelves of a local supermarket in Washington, March 27, 2024 (AFP/MANDEL NGAN)

Inflation again appeared to move in opposite directions in February in the United States, rebounding slightly from a year ago, mainly driven by food and energy, but slowing from January, according to the index PCE, measure favored by the Federal Reserve (Fed).

According to data released Friday by the Commerce Department, the increase in consumer prices rose to 2.5% year-on-year in February, compared to 2.4% in January, in line with market expectations, but slowed down. at 0.3% over one month, compared to 0.4% the previous month.

The index is in line with the expectations of analysts, who accurately predicted the figures, according to the consensus published by MarketWatch.

So-called core inflation, which excludes food and energy prices, is on the other hand falling, both over one month and over the year.

Over one month, the underlying PCE index fell to 0.3%, against 0.5% in January, while over one year it fell to 2.8%, against 2.9% a month earlier.

The PCE index is the inflation measure favored by the American central bank, the Fed, which wants to bring it down to 2%, a target it plans to achieve in 2026.

In this case, it follows the trend observed on the other inflation index CPI, on which Americans’ pensions are indexed, which had also experienced a small rebound over a year but had accelerated over a month.

The two indices do not measure exactly the same things, with the CPI index in particular giving a significantly more important place in its evaluation of price developments to the amount of rents than does the PCE index.

The Commerce Department also said that household incomes slowed in February, up 0.3% from January, while their spending increased more sharply, to 0.8% over the month from 0.3%. % in January, this time significantly exceeding market expectations.

The inflation curve is watched closely by the Fed, which has been fighting against its rise for more than two years. Its main tool to deal with this has been to raise rates between March 2022 and July 2023, pushing them up to the range of 5.25-5.50%, their highest level in 20 years.

The institution now plans to start lowering them this year. But its officials have largely procrastinated in recent weeks, saying they prefer to wait several months to be certain that inflation is not likely to rebound.

Analysts, however, anticipate a first rate cut at the meeting scheduled for mid-June, according to the CME Group’s FedWatch aggregator, while the next Fed meeting, scheduled for April 30 and May 1, should again be closed by a status quo on the rate front.

© 2024 AFP

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