Fed’s preferred inflation gauge stayed high in March as rate hike looms

Some Fed officials are concerned that core inflation hasn’t declined much since reaching 4.7% in July.

A separate government report Friday showed that companies continued to provide solid pay raises to their employees last quarter. The report, called the employment cost index, which measures wages, salaries and benefits, rose 1.2% in the first three months of the year. That was up from 1.1% in the final quarter of last year.

The Fed is thought to monitor the inflation gauge that was issued Friday, called the personal consumption expenditures price index, even more closely than it does the government’s The PCE index showed that food prices dropped 0.2% from February to March. Gas costs plummeted 3.7%, which partly reflected seasonal changes. Prices at the pump have since increased in many states.

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A key inflation gauge tracked by Fed remained high in MarchA key index of underlying inflation that is closely followed by the Federal Reserve remained elevated last month, keeping the Fed on track to raise interest rates next week for the 10th time since March of last year. The index, which excludes volatile food and energy costs to capture “core” prices, rose 0.3% from February to March and 4.6% from a year earlier — still far above the Fed’s 2% target rate. Some Fed officials are concerned that core inflation hasn’t declined much since reaching 4.7% in July.
Source: AP - 🏆 728. / 51 Read more »