While overall prices have increased (inflation), there are pockets of deflation (price decreases) in various industries. These include household goods (furniture, appliances), some groceries (apples), travel expenses, and durable goods (vehicles). Deflation is primarily due to supply chains improving, demand decreasing, and the strong US dollar making imports cheaper. However, quality improvements over time (e.g., in electronics) can also appear as price declines in government data.
Private sector companies in the US added a significant number of workers in March, with wages increasing for both existing and new employees. Leisure and hospitality led the job growth, followed by construction and trade. The South added the most jobs regionally, while small businesses saw limited growth. This strong employment data suggests the labor market remains healthy.
Inflation, measured by core PCE, rose 2.8% annually in February, on par with estimates. Both headline and core PCE increased 0.3% monthly.
Despite meeting expectations, the Fed remains likely to hold interest rates steady. However, rising consumer spending (0.8% monthly) could lead to additional inflation pressures.
The report indicates inflation remains sticky, potentially delaying Fed rate cuts expected for June.
