US PCE Inflation at 2.8% in February Before Iran War

A key U.S. inflation gauge showed prices rising at a steady but elevated pace in February, before a war involving Iran drove up energy costs and further pressured the economy. The personal consumption expenditures price index, the Federal Reserve's preferred measure, increased 0.4 percent from January and 2.8 percent from a year earlier, according to a Bureau of Economic Analysis report released Thursday. Excluding volatile food and energy categories, the core index rose 0.4 percent monthly and 3.0 percent annually, a slight easing from January's 3.1 percent year-over-year gain.

The data, covering the period before the conflict began in March, underscores that inflationary pressures persisted even without the recent surge in oil and gas prices. Real consumer spending grew just 0.1 percent in February, following no change the prior month, while current-dollar personal consumption expenditures rose 0.5 percent. Spending on goods increased due to higher motor vehicle purchases, and services spending climbed, led by transportation. Personal income fell 0.1 percent, with after-tax disposable income contracting 0.5 percent when adjusted for inflation, the largest such drop in nearly...