BlockBeats News, March 13, Beijing time Friday 8:30 pm, the United States will release the January PCE Price Index. The market expects the PCE data to rise by 2.9% year-on-year, consistent with the previous value, and increase by 0.3% month-on-month, a slowdown from the previous month’s 0.4%. On the core side, the market expects the core PCE Price Index’s year-on-year growth rate to accelerate slightly to 3.1%, the largest increase since April 2024, with a month-on-month increase remaining unchanged at 0.4%.
As the “ace” data of the US Bureau of Economic Analysis, the PCE Price Index directly references CPI data in several price categories. Following the latest CPI data release, economists quickly raised their forecasts for the February core PCE Price Index, which will be released on April 9. Several economists expect the index to rise for the second consecutive month by 0.4%, and some are even mentally prepared for a larger increase.
This difference stems from the different weightings of each inflation gauge on specific items. The CPI compiled by the US Bureau of Labor Statistics places a strong emphasis on housing costs. A key indicator called “primary residence rent” has only risen by 0.1% since January, the lowest level in five years. At the same time, it assigns higher importance to used car prices, which have been declining for three consecutive months.
On the other hand, the PCE Price Index places more emphasis on specific commodity costs. Economists point out that products such as computer software and jewelry showed significant increases in the February CPI, with a greater impact on PCE inflation. Forecasters from Barclays, Morgan Stanley, and Bank of America expect core commodity prices in February to rise by at least 0.8%, which is 10 times the increase shown in the latest CPI report.
Upon careful examination of the CPI data that intersects with PCE, it is found that not only January but also the February PCE data may be less optimistic. Moreover, all of this is happening before the outbreak of the US-Iran war, leading to soaring prices of other costs such as energy and fertilizers.
Furthermore, there is a worrisome phenomenon occurring in the two main indicators measuring the price levels faced by US consumers: the PCE data, which has almost always been “milder” than CPI data, is now experiencing a significant warming trend.
