Inflation Ticked Down in March

By
Taylor Tompkins
Taylor Tompkins
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Taylor Tompkins has worked for more than a decade as a journalist covering business, finance, and the economy. She has logged thousands of hours interviewing experts, analyzing data, and writing articles to help readers understand economic forces. She is the Economics Editor for news at Investopedia.

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Published April 28, 2023
A mother and daughter unload groceries in the kitchen.

Thomas Barwick/Getty Images

Personal consumption expenditures (PCE) slowed last month, but likely not enough for the Federal Reserve to stop rate hikes.

The Fed's preferred measure of inflation was up 0.1% throughout March, less than the month prior and on par with economists' estimates, according to data released from the Bureau of Economic Analysis Friday. From the same time a year ago, PCE was up 4.2%, less than the 5% year-over-year increase in February.

The yearly growth is the slowest since May 2021. The drop could indicate that the Fed's campaign of interest hikes is having the intended impact—settling rampant inflation.

However, traders are not convinced Fed officials are satisfied with their work. About 88% are pricing in a 25 basis point rate hike for the May 2 meeting, according to the CME FedWatch tool.

Excluding volatile food and energy prices, the price index remained the same month-over-month. This could be an indicator that the core prices the Fed is trying to nudge downward are stubbornly staying in place.

The increase was once again led by housing and utility costs, while energy costs took the biggest dive.

Article Sources
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  1. Bureau of Economic Analysis. "Personal Income and Outlays, March 2023."

  2. Federal Reserve Economic Data. "Personal Consumption Expenditures: Chain-type Price Index."

  3. CME. "FedWatch Tool."

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