Inflation continues to climb, only a week after the Fed’s decision to keep interest rates unchanged.
The Personal Consumption Expenditures (PCE) price index increased 0.3% in February. Excluding food and energy (so-called “core inflation”), the PCE price index increased by 0.4%, according to the latest report from the Bureau of Economic Analysis.
Year-over-year, the PCE price index increased 2.5%; excluding food and energy, it went up by 2.8%.
Also on the rise, the report showed a 0.4% increase ($87.8 billion) in February’s PCE—reflecting increases of $56.3 billion and $31.5 billion in spending for goods and services, respectively.
This falls in line with the inflation reported in the latest Consumer Price Index (CPI), which went up 0.2% in February, according to the Bureau of Labor Statistics.
As major economic indicators have wobbled in the early days of the second Trump administration, the short-term impact on housing remains unclear, though economists have warned inflation and interrelated consumer confidence dips could slow an already sluggish real estate market.
The elevated inflation in the last six months is concerning, said Harvard Economics Professor Jason Furman on X (formerly Twitter).
“Even prior to tariffs, this would have been a reason to be concerned about the no landing scenario,” he wrote. “It truly amazes me that any policymakers would be doing anything at this point to add to this continued problem. But they are.”
Mohamed El-Erian, President of Queens’ College at the University of Cambridge and Chief Economic Adviser at financial services conglomerate Allianz, wrote on X, “the whiff of U.S. stagflation is intensifying,” based on this new report and the low consumer confidence shown in the University of Michigan’s U.S. Consumer Sentiment report.
“Core PCE inflation came in at 0.37% for March, with hotter goods and services components, while spending was weaker than expected,” he wrote. “Meanwhile, the latest UMich survey numbers show consumer confidence at the lowest level in more than two years. Even more striking, the 5 – 10-year inflation expectation rose to 4.1%, the highest level for 32 years.”