Inflation fell to 4.2% in March, according to key gauge watched by Fed
Zachary Halaschak
Video Embed
Inflation fell to a 4.2% annual rate in March, as measured by the gauge favored by the Federal Reserve.
The decline in the personal consumption expenditures price index reported Friday morning by the Bureau of Economic Analysis shows that inflationary pressures are abating in the face of the Fed’s campaign to slow economywide spending by hiking interest rates.
Nevertheless, inflation is still running much hotter than the central bank’s target and dinging household purchasing power.
Core PCE inflation, a measure of inflation that strips out energy and food prices and is generally less volatile, is clocking in at a 4.6% year-over-year rate.
The Fed’s target for inflation is 2%.
Other recent measures of inflation have shown that prices are still continuing to fall back to earth from the highs notched last year — which marked the country’s worst inflationary plague in decades.
Earlier this month, the Bureau of Labor Statistics announced that inflation fell nearly a percentage point to 5% in the year ending in March in an update to the consumer price index, the lowest such rate since May of 2021.
In addition, inflation plunged to a 2.7% annual rate in March, as measured by the producer price index — the lowest level in more than two years.
The Fed once again hiked interest rates last month by a modest degree last month, even despite growing uncertainty in the banking sector.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The Fed will meet next week to decide whether to hike interest rates, although there are mixed opinions on if the central bank should hike rates at all.
The rate hike would come amid signals the labor market is finally softening in response to the year of monetary tightening, something that Fed officials had been hoping to see.