US PCE Inflation Highest in 4 Years

The US PCE price index rose 0.7% month-over-month, matching expectations and accelerating from February’s 0.4% increase. It was the steepest monthly increase in PCE prices since June 2022. Goods prices jumped 1.4%, driven by a 20.9% rally in gasoline and other energy goods. Also, services inflation accelerated to 0.3%, up from 0.2%, mainly due to transportation services. The core PCE index, excluding food and energy, increased 0.3% after a 0.4% gain in February. Annually, the headline PCE index reached 3.5%, while the core index rose to 3.2%.

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.