U.S. January PCE Price Index Expected to Show Moderate Increase

The U.S. is set to release the January Personal Consumption Expenditures (PCE) Price Index at 8:30 PM UTC+8 on Friday. According to Odaily, market expectations suggest a year-over-year increase of 2.9%, consistent with the previous figure, and a month-over-month rise of 0.3%, slightly down from last month's 0.4%. The core PCE Price Index is anticipated to accelerate to a 3.1% year-over-year increase, marking the largest rise since April 2024, with the month-over-month increase remaining steady at 0.4%. The PCE Price Index, a key data point from the U.S. Bureau of Economic Analysis, incorporates data from the Consumer Price Index (CPI) across several categories. Following the latest CPI data release, economists have adjusted their forecasts for the core PCE Price Index for February, set to be announced on April 9. Some economists predict a second consecutive month of a 0.4% increase, while others are prepared for a larger rise. The Trump administration has highlighted the CPI report, claiming that price pressures are under control and advocating for significant interest rate cuts by the Federal Reserve. However, hawkish members within the Fed point to the PCE data, arguing that the inflation rate remains a full percentage point above the 2% target set by policymakers. Economists at Bank of America note that while CPI data appears moderate, PCE inflation does not provide a strong case for rate cuts, especially considering the upward risks posed by oil prices. This situation places the Federal Reserve in a difficult position. A weakening labor market should support rate cuts, but if PCE remains strong and energy and food prices are impacted by ongoing conflicts, officials may struggle to justify resuming an easing cycle.