US monthly inflation slows; consumer spending surges
© Reuters. FILE PHOTO: A woman shops for groceries at El Progreso Market in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File PhotoWASHINGTON -U.S. prices increased less than expected in February, with the cost of services outside housing and energy slowing significantly, keeping a June interest rate cut from the Federal Reserve on the table.
The personal consumption expenditures price index rose 0.3% last month, the Commerce Department's Bureau of Economic Analysis said. Data for January was revised higher to show the PCE price index climbing 0.4% instead of 0.3% as previously reported. Goods prices rose 0.5% last month, boosted by a 3.4% jump in the cost of gasoline and other energy products.
Policymakers anticipate three rate cuts this year. Financial markets expect the first rate reduction in June. Fed Governor Christopher Waller said on Wednesday,"there is no rush to cut the policy rate" right now, but he did not rule out trimming borrowing costs later in the year. Core inflation increased 2.8% year-on-year in February, the smallest gain since March 2021, after rising 2.9% in January. The Fed tracks the PCE price measures for its 2% inflation target. Monthly inflation readings of 0.2% over time are necessary to bring inflation back to target.
PCE services inflation excluding energy and housing gained 0.2% last month after surging 0.7% in January. Policymakers are monitoring the so-called super core inflation to gauge their progress in fighting inflation.
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