Inflation Data Shows Persistent Pressure with Core PCE Rising Most Since June 2024

The Federal Reserve's preferred inflation gauge, the PCE price index, recorded significant increases in February 2025. Core PCE rose 0.37% month-over-month, marking the third consecutive month with annualized rates exceeding 4%. This pushed the six-month core PCE index to 3.4% annualized, the highest level since June 2024. Year-over-year, the core measure increased 3.0%, while the overall PCE index climbed 2.8%. Energy prices jumped 0.81% month-to-month before the Iran war, and food prices rose 0.27%. Durable goods saw a 1.0% monthly spike driven by jewelry, sporting equipment, guns, ammunition, and computer software. The market-based core PCE index, excluding imputed components, increased 0.39% month-over-month, the largest rise since February 2023. Housing costs, including imputed measures, continued to suppress overall inflation readings despite actual homeowner expenses surging. The Federal Reserve maintains a 2.0% inflation target for both core and overall PCE measures.