The progress of PCE inflation has stalled, while consumer spending has been strong

The Fed's favoured PCE inflation data stagnated in March for the first time in nearly a year as consumer spending was strong, a welcome relief before markets expected tariffs to generally push prices higher. The PCE index has stagnated since February, according to data released by the Bureau of Economic Analysis. Excluding food and energy, core PCE was also flat, the most modest in nearly five years. Real inflation-adjusted personal consumption expenditures rose 0.7 per cent in March at a monthly rate after an upward revision from the previous month, indicating that households were spending aggressively to avoid new tariffs. The data capped a quarter in which the US economy contracted for the first time since 2022 on the back of a surge in pre-tariff imports and more modest consumer spending. (Jin X)