On March 13, at 20:30 Beijing time on Friday, the US will release its January PCE data. The market expects PCE to rise 2.9% year-on-year and 0.3% month-on-month; core PCE may rise to 3.1% year-on-year, the largest increase since April 2024.
Analysis indicates that although recent CPI data show some easing of inflationary pressures, the higher weighting of PCE in commodity prices means that price increases in some goods, such as software and jewelry, could drive up core PCE. If core PCE grows significantly faster than CPI year-on-year, the gap between the two could reach its largest level in decades.
As the Federal Reserve focuses more on the PCE indicator when formulating policy, rising inflation may weaken expectations for interest rate cuts this year. Meanwhile, the Middle East conflict is pushing up oil prices and could further increase energy, transportation, and food costs, posing new upside risks to future inflation trends.
