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US inflation, as measured by the Federal Reserve’s preferred gauge, remained firm in February, with core prices meeting expectations and reinforcing concerns around sticky price pressures.
Data released by the Commerce Department showed that the core Personal Consumption Expenditures (PCE) price index rose 3% year-on-year in February, in line with expectations. The headline PCE inflation also came in at 2.8%, matching consensus estimates and holding steady from the previous month.
On a monthly basis, the PCE price index increased 0.4%, up from 0.3% in January, indicating a sequential pickup in price momentum. Core PCE, which excludes food and energy, also rose 0.4% month-on-month, in line with forecasts.
The data suggests inflation remained elevated even before the escalation of the Iran conflict, which has since pushed oil prices higher and added to upside risks.
Meanwhile, the personal savings rate fell to 4% in February from 4.5% in January, moving closer to December’s 3.9% level. Over the past year, it has declined from 5.2%, indicating consumers are saving less.
The report was delayed due to the government shutdown and was originally scheduled for release last month, with the next PCE data for March due on April 30.
Goldman Sachs had earlier said the bulk of the inflation impact from the war will come via oil, with a 10% rise in crude likely lifting headline PCE by 0.2 percentage points and core by 0.04 points, largely through transport costs.
It also flagged risks from higher fertiliser prices, which could push food inflation up by 1.5% and add 0.1 percentage point to headline inflation, along with second-round effects that may keep price pressures elevated into 2026.
