In March, the personal consumption expenditure (PCE) inflation rate in the United States slowed, marking the lowest level in six months. This suggests that inflation in the U.S. was improving before the full effects of tariffs took hold.
According to the U.S. Department of Commerce on the 30th (local time), the PCE price index last month rose 2.3% year-over-year, the smallest increase since September of last year (2.1%). The increase was 0.4 percentage points (p) smaller than the previous month (2.7%) and larger than the market forecast (2.2%). Compared to the previous month, it recorded no change, putting an end to the upward trend for now.
Excluding volatile food and energy, the core PCE price index rose 2.6% year-over-year, a decrease in the rate of increase from the previous month (3%). It matched market expectations. The month-over-month increase rate dropped from 0.4% last month to 0.0%.
The PCE price index measures the prices that U.S. residents pay for goods and services and is a key indicator for the Federal Reserve (Fed). The core PCE index excludes the prices of energy and food, which are subject to short-term volatility, and is assessed to better reflect the fundamental trends in prices.
Real consumer expenditure, released alongside the price index, rose 0.7% month-over-month, exceeding the estimated 0.5%. This suggests that U.S. consumers actively increased their expenditure ahead of the implementation of tariffs.
Bloomberg News noted that the slowdown in inflation last month suggests that "the economy was in good shape before President Trump's tariffs were fully implemented" and described it as "a welcome respite amid anticipated inflation from tariffs."