On the headline number, steady disinflation in PCE prices from 7.12% highs in June 2022 has stalled over the last 2 months and the pace of change in prices over a 3 month period has been concerning.
Going Forward, base effects kick in (core PCE Prices fell from 4.25% to 3% over June to Dec 2023), energy prices have been on a rise amid escalation in Geo-political tensions with great uncertainty on the outlook of future prices, the immaculate disinflation in prices of durable goods seen in second half of 2023 has clearly reversed as prices rose for 3 consecutive months at an average 0.15% and Non Durable Goods are also seeing some price pressures build. Goods have a relative importance of 33% in construction of PCE Price Indices. Services inflation has seen a steady price build up.
The U.S PCE Release showed headline PCE Prices rose 0.32% and Core Prices also rose 0.32%.
Over the 3 months, Price of Services rose 5.55% while energy good and services rose 8%. PCE Services excluding Energy and Housing rose at 0.40% mom and PCE excl Food, Energy and Housing rose 0.30% mom.
Like, Austin Goolsbee said, "one month is no months, but three months - that's real month" and the data paints a grim picture for the outlook of interest rates.
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