Inflation in the first quarter rose sharply, with GDP showing a 3.4% annual rate increase compared to 1.8% in the previous quarter.
Core inflation, excluding food and energy, also surged to a 3.7% annual rate, higher than economists’ expectations of 3.4%.
Concerns are raised about the upcoming March PCE report, with expectations of worse-than-forecasted gains in both headline and core indexes.
Large increases in the PCE index could indicate inflation is not slowing and may even be rising, contrary to the Fed’s target of 2%.
Analysts are skeptical of such negative projections, suggesting potential revisions to January and February PCE readings instead.
Even if March PCE inflation rises by the expected 0.3%, upward revisions to previous months would still reflect a concerning inflation trend, impacting investor, consumer, and business expectations for rate cuts.
