A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid.
A clearance sign is displayed at a retail clothing store in Downers Grove, Ill., Monday, April 1, 2024. On Friday, April 26, 2024, the Commerce Department issues its March report on consumer spending. – A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed's reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden's re-election bid.
Friday’s inflation data showed that excluding volatile food and energy costs, “core” prices rose by an elevated 0.3% from February to March, unchanged from the previous month. Compared with a year earlier, core prices rose 2.8% for a second straight month. The Fed closely tracks core prices, which tend to provide a particularly good read of where inflation is headed.
Many economists say they think the Fed may end up cutting its key rate only once or twice this year, perhaps beginning in September. Others say they think the central bank may not cut its benchmark rate at all in 2024. The Fed tends to favor the inflation gauge that the government issued Friday — the personal consumption expenditures price index — over the better-known. The PCE index tries to account for changes in how people shop when inflation jumps. It can capture, for example, when consumers switch from pricier national brands to cheaper store brands.
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