US January PCE inflation matches expectations as revised Q4 GDP slows; markets rise and yields ease
The Facts
- The PCE price index rose 0.3% in January from December, compared with a 0.4% increase in December.
- Core PCE inflation (excluding food and energy) increased 0.4% in January, in line with expectations and matching December’s monthly core increase.
- Over the 12 months through January, headline PCE inflation was 2.8%.
- Over the 12 months through January, core PCE inflation was 3.1%, slightly higher than December’s 3.0% reading.
- An updated estimate showed US real GDP grew at a 0.7% annualized rate in the fourth quarter, below the initial 1.4% estimate.
- Market reaction to the inflation data included a rise in stocks and a move lower or mixed in US Treasury yields.
- Multiple reports noted the January inflation data were released after delays tied to a government shutdown and that the figures predated the Iran conflict, which has since driven energy prices higher.
Context
What is the PCE price index and why does it matter?
The Personal Consumption Expenditures (PCE) price index is the Federal Reserve’s preferred inflation gauge and is used as a key yardstick for its 2% inflation objective. Finimize,Morningstar
What did the January report show for headline vs. core inflation?
Headline PCE inflation rose 0.3% in January and was up 2.8% from a year earlier, while core PCE rose 0.4% on the month and was up 3.1% year over year. Reuters,WSJ
Why did markets focus on GDP along with the inflation data?
Reports highlighted that revised fourth-quarter GDP growth slowed to a 0.7% annualized pace, and the combination of inflation that met expectations with softer growth helped shape a risk-on move in stocks and shifts in Treasury yields. Bloomberg Business,Finimize,mint
The receipts — all 59 sources
Wire services (7)
Independent coverage (50)
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