Inflation Rate Jumps to 6.5% in February

The Fed’s favorite inflation metric showed that prices continued to rise in 2022 but not as fast as economists had projected…(BEA)

  • Y-O-Y: The Personal Consumption Expenditure Index increased to 6.4%, up from 6.0% in January. Core PCE was up 0.2% to 5.4%.
  • M-O-M: The PCE Index increased 0.6%, a faster rate than the 0.5% reported in January. Core PCE was up 0.4%, down from the 0.5% rate the previous month.

SLOWING? Economists had actually predicted a higher number from core PCE with 5.5% annual growth and a 0.4% monthly gain.

  • Neil Irwin of Axios noted on Twitter “Progress, of a sort? PCE inflation was 0.0% for durable goods in February. Nondurables and services were where the inflation action was at.”

Incomes continued to rise in February as did spending though a little less than expected…

  • Personal income increased 0.5%, the biggest jump since November. Economists hit the nail on the head with a 0.5% prediction. And in even better news, wages and salaries were up 0.8%.
  • Personal spending was up 0.2%, a big drop after January’s 2.7% increase. Economist thought spending would be higher at 0.5%

The good news is incomes continue to rise and even more so when looking at wages which are increasing at a 10.0% annual clip. Unfortunately, that is barely eclipsing the inflation rate and the lower increase in spending could be a reflection of that fact. Let us hope that the flat price increase in goods and the lower than expected core PCE data is a sign inflation pressures are easing.