A surge in oil and gasoline prices due to the ongoing conflict in Iran has cast a shadow over inflation forecasts. The mixed signals from two main measures of inflation – the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index – are leaving economists confused.
The CPI, which tracks the change in consumer prices, showed a relatively low 2.4% increase in January, but is expected to remain steady in February. On the other hand, the PCE index, preferred by the Federal Reserve, reported a stubbornly high 2.9% inflation rate in December and is expected to be the same in January.
The discrepancy between these two measures could have a significant impact on inflation forecasts. As the situation unfolds, investors will closely watch these numbers for insights into the overall inflation outlook.
Source: https://www.wsj.com/economy/central-banking/is-inflation-cooling-or-stubbornly-high-both-can-be-true-9f541f78