PCE Price Index Reveals Latest Data Suggests Inflation Slowing But Elevated

March PCE Indicates Slower Inflation Growth

The BEA (Bureau of Economic Analysis) released the Personal Consumption Expenditures (PCE) for March indicating that inflation remains elevated but its advance is slowing down on a month-over-month and year-over-year basis.

The report was released at 8:30 EDT this morning and began with personal incomes and outlays for March 2023 saying that, “Personal income increased $67.9 billion (0.3 percent) in March”

The PCE only grew 0.1% MoM and 4.2% YoY. That is a 0.8% decrease from the year-over-year numbers in February which came in at 5% and well below economist’s expectations expected to see inflation come in at an annual pace of 4.6%.

The core PCE rose 0.3% month over month and 4.6% year-over-year down 0.1% from 4.7% in February. The core PCE excludes energy and food costs and is the preferred measure of inflation by the Federal Reserve. Economists had anticipated that the core PCE would be lower year-over-year with a reading of 4.5%.

Fed Rate Hike Expectations

This report slightly increased the probability by the CME’s FedWatch tool that the Federal Reserve will implement its 10^th consecutive rate hike by raising rates by ¼% at the FOMC meeting next week. The probability of a ¼% rate hike rose from 83.9% yesterday to 85% today.

Impact on Gold and US Dollar

This report had little impact on gold futures pricing. As of 5:25 PM EDT, gold futures basis the most active June 2023 contract is up $0.40 or +0.02% and fixed at $1999.40. The dollar also had fractional gains up 0.18% with the index currently fixed at 101.43.

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Wishing you as always good trading,
Gary S. Wagner