Federal Reserve’s Preferred Inflation Gauge Marks First Slowdown In 4 Months

Zinger Key Points

• The Personal Consumption Expenditures price index grows by 2.5% in January 2025 on a year-over-year basis.
• Core PCE, excluding food and energy, increases 2.6% from the same period last year. 

The Federal Reserve’s key inflation measure came in in-line with expectations on Friday, with headline PCE inflation marking its first slowdown in four months.

The Details: The Personal Consumption Expenditures price index grew by 2.5% in January 2025 on a year-over-year basis, decelerating from 2.6% in December, according to government data. The figure was in line with economists’ forecasts. 

Core PCE, excluding food and energy, increased 2.6% from the same period last year. 

On a monthly basis, the PCE index advanced 0.3%, accelerating from December’s 0.2% and in-line with forecasts. 

On a monthly basis, core PCE rose 0.3%, slightly above the 0.2% gain recorded in the previous month, and also matching forecasts. 

Food prices rose 0.3% in January, higher than 0.2% in December while cost of energy eased to 1.3% down from 2.4%. 

Market Reactions

Futures on U.S. equity indices are moving higher in Friday’s premarket session. Contracts on the Dow Jones were 0.42% higher at 8:44 a.m. ET.  

S&P 500 futures were 0.12% higher, after the SPDR S&P 500 ETF Trust closed 1.6% lower on Thursday.

The benchmark 10-year yield rose slightly to 4.26%. Gold, as tracked by the SPDR Gold Trust fell 0.53% to $263.53. 

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Originally Posted February 28, 2025 – Federal Reserve’s Preferred Inflation Gauge Marks First Slowdown In 4 Months