US Fed's preferred inflation indicator slightly softens in March

ISTANBUL

The US Federal Reserve's preferred inflation indicator slightly softened in March annually, but came higher than market estimates, according to the Commerce Department figures released Friday.

The core personal consumption expenditures (PCE) price index rose 4.6% annually in March, down from a 4.7% year-on-year gain in February, but came higher than the market expectation of a 4.5% increase.

On a monthly basis, the index rose 0.3% in March, after posting a monthly gain in February, coming in line with the market expectation.

"The increase in current-dollar personal income in March primarily reflected increases in compensation, personal income receipts on assets, and rental income of persons that were partly offset by decreases in proprietors’ income and personal current transfer receipts," the Commerce Department said in a statement.

On a monthly basis, food prices decreased 0.2% and energy prices declined 3.7%, according to the figures.

The PCE price index, which includes food and energy prices, rose 4.2% annually in March, also easing from a 5.1% year-on-year gain in February.

On a monthly basis, the index rose 0.1% in March, down from a 0.3% month-on-month gain in February.

The easing inflation figures indicate that the Fed could soon pause its monetary tightening cycle in interest rate hikes this year.

The US central bank made a total of 425-point rate hikes on seven occasions last year to fight record-high inflation that climbed to its highest level in over 40 years by mid-2022.

The Fed also made a 25 basis points rate hike on Feb. 1, followed by another 25 basis points hike on March 22 that carried its benchmark funds rate to a range of 4.75% to 5%.