Core PCE Inflation Rises Amid Stagflation Fears

Inflation in the U.S. remains a concern as the Federal Reserve's preferred metric, the core Personal Consumption Expenditures (PCE) price index, rose 2.8% in February, exceeding expectations and January's rate. This rise in core inflation, which excludes food and energy, suggests persistent price pressures before the impact of anticipated tariffs. Consumer spending increased by 0.4% in February, rebounding from a decline but still below forecasts, while personal incomes saw an unexpected rise of 0.8%. The data coincides with fears that President Trump's impending tariffs could further fuel inflation and economic stagnation. U.S. financial markets reacted with declines in stock indices and Treasury yields, reflecting anxiety over economic growth and future Federal Reserve actions. Economists express concern over potential stagflation, a scenario where inflation and unemployment both rise while economic growth slows.