US PCE inflation falls back, but consumer spending remains strong.

The PCE inflation data favored by the Federal Reserve showed the first stagnation in nearly a year in March, with strong consumer spending, which was a welcome relief before the market expected tariffs to broadly push up prices. Data released by the US Bureau of Economic Analysis shows that the PCE index has been stagnant since February. Excluding food and energy, core PCE also remained flat, at the mildest level in nearly five years. Adjusted for inflation, real personal consumption expenditures in March increased by 0.7% month-on-month, with the data revised upward from the previous month, indicating that households are spending heavily to avoid new tariffs. These data mark the end of the first quarter, with the US economy shrinking for the first time since 2022 due to a surge in imports before tariffs and relatively mild consumer spending.