US PCE Inflation Accelerates in February

The US PCE price index rose 0.4% month-over-month, matching expectations and accelerating from January’s 0.3% increase. It was the steepest monthly increase in PCE prices in a year as goods prices jumped 0.7%, reversing January’s stagnation, driven by higher costs in motor vehicles and parts, recreational goods, gasoline, clothing, and food. Meanwhile, services inflation slowed to 0.2%, down from 0.4%, as healthcare, financial services, and recreational services cooled. The core PCE index, excluding food and energy, also climbed 0.4% after a 0.3% gain in January. Annually, the headline PCE index reached 2.8%, while the core index held at 3.0%.

The US PCE price index is expected to rise by 0.4% month over month in February 2026, slightly above January’s 0.3% increase. The core PCE index, which excludes food and energy, is also projected to grow by 0.4%, matching the previous month’s pace. On a year-over-year basis, headline PCE inflation is likely to remain steady at 2.8%, while the core rate is expected to ease slightly to 3% from 3.1%. Overall, the report is anticipated to indicate that price pressures remained elevated, broadly in line with recent months and still above the Federal Reserve’s 2% target in February, prior to the onset of the war with Iran. The PCE price index is the Federal Reserve’s preferred measure of inflation.

The US PCE price index rose by 0.3% from the previous month in January of 2026, aligned with market expectations and slowing slightly from the 0.4% increase from the previous month. Costs of durable goods rose by 0.4% from December's 0.5% jump, offsetting the 0.1% drop in nondurable goods. When excluding energy and food prices, the core PCE price index rose by a sharper 0.4%. From the previous year, the PCE price index rose by 2.8%, easing from the 2.9% increase in the previous month but remaining sharply above the Federal Reserve's 2% target.