Inflation held sticky at 3% as U.S. headed into war with Iran, key Fed gauge shows
Source: CNBC
Published Thu, Apr 9 2026 8:35 AM EDT Updated 14 Min Ago
Core inflation held above the Federal Reserve’s target before the recent surge in energy prices, according to a key gauge released Thursday that offers the central bank a snapshot of conditions leading into the Iran war. The core personal consumption expenditures price index, which excludes food and energy, rose a seasonally adjusted 3% in February, the Commerce Department reported. The all-items headline inflation measure increased 2.8%.
Both readings were in line with the Dow Jones consensus. The core annual inflation rate was 0.1 percentage point lower than in January while headline was unchanged. On a monthly basis, both core and headline prices rose 0.4%, also meeting forecasts.
The Fed uses the PCE price index as its primary yardstick and forecasting tool for inflation. The Fed, which targets 2% inflation, sees core as a better indicator of longer-term trends.
In addition to the inflation readings, the report also showed consumer spending unexpectedly down 0.1% on the month, while personal income rose 0.4%. Economists had expected spending to rise 0.6% with income up 0.4%.
Read more: https://www.cnbc.com/2026/04/09/core-inflation-was-3percent-in-february-as-expected-key-fed-gauge-shows.html
From the source -
Link to tweet
@BEA_News
People's incomes fell 0.1% in February; spending grew 0.5%. Both figures are in current dollars.
https://bea.gov/data/income-sa
Article updated.
Previous article/headline -
Published Thu, Apr 9 2026 8:35 AM EDT Updated 1 Min Ago
Core inflation eased slightly in February before the recent surge in energy prices, according to a key gauge released Thursday that offers the Federal Reserve a snapshot of conditions leading into the Iran war.
The core personal consumption expenditures price index, which excludes food and energy, rose a seasonally adjusted 3% in February, the Commerce Department reported. The all-items headline inflation measure increased 2.8%.
Both readings were in line with the Dow Jones consensus. The core annual inflation rate was 0.1 percentage point lower than in January while headline was unchanged. On a monthly basis, both core and headline prices rose 0.4%, also meeting forecasts.
The Fed uses the PCE price index as its primary yardstick and forecasting tool for inflation. The Fed, which targets 2% inflation, sees core as a better indicator of longer-term trends.
This is breaking news. Please refresh for updates.
Original article -
The personal consumption expenditures price index was expected to show a 3% core inflation rate in February, according to the Dow Jones consensus.
This is breaking news. Please refresh for updates.
= new reply since forum marked as read
Last edited Thu Apr 9, 2026, 10:02 PM - Edit history (2)
PCE February +0.4% (January was +0.3%);;: 12 months: 2.8% (same as in January's report);;
CORE PCE: +0.4% (January was +0.4%);; 12 months: 3.0%, (down 0.1% from January's reported 3.1%)
4/9/26
SOURCE URLS: 4/9/26 release: https://www.bea.gov/data/income-saving/personal-income
. . . CURRENT RELEASE - https://www.bea.gov/news/2026/personal-income-and-outlays-february-2026
. . . FULL RELEASE AND TABLES - UPDATE THIS: https://www.bea.gov/sites/default/files/2026-03/pi0126.pdf
. . . . . . I can't find the equivalent of this one for this month's report, I'll have to dig, but gotta go shopping today
. . . PCE DATA SERIES: https://fred.stlouisfed.org/series/PCEPI
. . . CORE PCE DATA SERIES: https://fred.stlouisfed.org/data/PCEPILFE
Regular PCE aka "all items"
,
CORE PCE (excludes food and energy)
These are horrible numbers. The rolling 3 month average increase, annualized, is:
Regular PCE: 4.11%, , Core PCE: 4.43%, and both are rising
Federal Reserves' inflation target: 2%
(These are calculated using the actual index values, as are my graphs)
As usual, I prefer to present annualized figures so they can be compared to the Fed's target and to different-length time periods
Looking at the month-over-month bar charts, February 2025 was huge. It fell out of the 12-month window in this report, which is why the 12-month graphs/numbers fell slightly (this is true for both the regular PCE and the core PCE. The PCE 12-month increase stayed the same 2.8% after rounding, while the core PCE 12 month average dropped 0.1% (from 3.1% in January to 3.0% in February, when rounded)
What falls out of the 12 month window is just as important, really, honestly, and truly, as what enters the 12-month window, in determining whether the 12-month average ticks up or down.
The CORE PCE is the Federal Reserve's favorite gauge for forecasting FUTURE inflation. This doesn't fit the media's typical narrative that inflation is coming down or at worst "sticky".
Remember the graphs (and OP) on inflation are FEBRUARY. The MARCH ones are likely to be uglier, given that the US/Israeli attacks on Iran began February 28 with the spikes in oil and fertilizer prices
So, the above (February) may very likely be remembered as the "good ol' days" of the Trump II kakistocracy.
The CPI inflation report for MARCH comes out tomorrow, so we'll see how much the Iran war affected things (the US/Israeli attacks began February 28)
ETA - from the OP excerpt:
. . .
The core personal consumption expenditures price index, which excludes food and energy, rose a seasonally adjusted 3% in February, the Commerce Department reported. The all-items headline inflation measure increased 2.8%.
Both readings were in line with the Dow Jones consensus. The core annual inflation rate was 0.1 percentage point lower than in January while headline was unchanged. On a monthly basis, both core and headline prices rose 0.4%, also meeting forecasts.
This makes it sound so tame, like inflation is steady-as-she-goes, meeting expectations, thank you Donald. WELL, FFS, the 0.4% month-over-month -- that's 4.8% on an annualized basis if one simply multiplies by 12 to annualize. More accurately, 0.4% is (1.004^12 - 1 )^100% = 4.91% taking into account that monthly increases compound. That's 4 point fucking 91 percent!! How in God's name anyone can write an article calling inflation "steady a 3%" and pointing out that the core fell 0.1 percentage points (on a 12-month basis), when the latest month is up 4 point fucking 91 percent on an annualized basis!! , I just don't know.
Actually, the core went up 0.367% in the last month-over-month, according to the index numbers for more accuracy, which annualizes to 4.49%. (And they properly round 0.367% to the reported 0.4% )
The regular PCE went up 0.375% in the last month-month, according to the index numbers for more accuracy, which annualizes to 4.60%. (And they properly round the 0.375% to to the reported 0.4%)
I went on and on in post#3 about how the 12-month average was tame looking in today's February report -- for example:
What falls out of the 12 month window is just as important, really, honestly, and truly, as what enters the 12-month window, in determining whether the 12-month average ticks up or down.
I'll just repost the CORE set of graphs, and I'll focus on the CORE, which is what the Fed uses to project FUTURE inflation (but the story is pretty much the same for the regular PCE too).
What fell out of the 12-month window was a 0.448% increase from January to February 2025 (5.51% annualized), so a 0.367% increase in January to February of this year, the latest, entering the 12-month window, together with what fell out of the window, actually resulted in a 0.1 percentage point DECREASE in the reported 12-month number, from 3.1% to 3.0%.
(I'm using the actual index numbers for more accuracy. The BEA does the same thing, but rounds the end result to the nearest 0.1%).
Well, now guess what happens in March? Look at the graph at the March 2025 number. It's only a tiny 0.097% increase from February to March (1.18% annualized). Anyway that drops out of the 12-month window in the March report.
Suppose the next report is that a very mild 0.2% month-over-month increase occurs February to March. That enters the 12-month window. The result is that, even with such a mild increase, the reported 12-month increase rises again by 0.1 percentage points to 3.1%
If February to March is a mild (by today's and the media's standards) 0.3%, then the reported 12-month increase rises by 0.2 percentage points to 3.2%
If February to March rises the same 0.4% that it rose from Jan to Feb, then the reported 12-month increase rises by 0.3 percentage points to 3.3%
We haven't even gotten into fuel price and knock-on price surges as a result of the current Iran war that started Feb 28. Let's say that causes a 0.6% February to March rise. Then the reported 12-month increase rises by 0.5 percentage points to 3.5%
Remember we're talking about the CORE PCE which doesn't have food or energy, so it would be the "knock-on" price increases that would show up in CORE inflation in the March report.
As for the regular, aka "all items" PCE, which include food and energy, the February to March rise is likely to considerably more, along with the 12-month number.