BlockBeats news: At 8:30 PM Beijing time on Friday, March 13, the United States will release the January PCE price index. Markets expect the PCE data to rise 2.9% year-over-year, matching the prior reading, and increase 0.3% month-over-month, a slowdown from last month’s 0.4%. On a core basis, markets anticipate the core PCE price index to accelerate slightly to a 3.1% year-over-year gain—the largest increase since April 2024—while the month-over-month increase remains unchanged at 0.4%.
As the Federal Bureau of Economic Analysis's flagship data, the PCE price index directly incorporates CPI data in several price categories. Following the latest CPI release, economists quickly raised their forecasts for the February core PCE price index, due to be published on April 9. Several economists expect the index to rise 0.4% for the second consecutive month, while others are preparing for an even larger increase.
This divergence stems from the different ways each inflation metric weights specific components. The CPI, compiled by the U.S. Bureau of Labor Statistics, places significant emphasis on housing costs. A key indicator called "primary residence rent" has risen by only 0.1% since January, the lowest increase in five years. Meanwhile, it also assigns higher weight to used car prices, which have been declining for three consecutive months.
On the other hand, the PCE price index places greater emphasis on the costs of certain specific goods. Economists note that products such as computer software and jewelry saw significant increases in February’s CPI, and these items have a larger impact on PCE inflation. Analysts at Barclays, Morgan Stanley, and Bank of America expect core PCE prices in February to rise by at least 0.8%, ten times the increase reported in the latest CPI data.
After carefully reviewing the CPI data that overlaps with PCE, it appears that the PCE data for February may also be disappointing—not just for January. All of this occurred before the outbreak of the Iran-Israel war, which caused prices for energy, fertilizers, and other costs to surge.
Additionally, it is worth noting that a striking phenomenon has emerged in the two primary indicators measuring the price level faced by U.S. consumers: the PCE data, which has almost always been more "moderate" than CPI data, is now heating up significantly.