PCE inflation, including its ‘core’ component, in the United States in February fuels operators’ hopes that the Fed can proceed without delay on the interest rate front. Even in the Eurozone, the hypothesis that the ECB could proceed in the direction of a rate cut is strengthening: French inflation fell faster than expected (to 2.3% in March, compared to 3.2% in February) reaching the lowest level since July 2021, while price growth was lower than expected also in Italy. Next week we will know the trend of inflation in the Eurozone at 2.5%, slightly slowing down.
Returning to the USA, PCE inflation – considered by the Fed to be the most important barometer of prices – increased in line with expectations in February. In particular, the price index for personal consumption expenditure, excluding food and energy, increased by 2.8% on a 12-month basis and by 0.3% compared to a month ago. Including volatile food and energy costs, the headline PCE reading was 0.3% for the month and 2.5% over 12 months, compared to estimates of 0.4% and 2.5%. Prices of services increased by 3.8% while those of goods decreased by 0.2%. Food prices increased by 1.3% while energy prices decreased by 2.3%. In the USA, personal incomes on a monthly basis were also decreasing, +0.3% compared to the previous +1% (the forecast was +0.4%). Consumption expenses instead increased by 0.8%, against the +0.5% expected. January data confirmed at +1% for incomes and +0.2% for expenses. Fed President Jerome Powell will speak shortly, at 4.30 pm Italian time.