Tonight's US PCE Data Could Unexpectedly Rise, Adding Uncertainty to Fed Rate Cut Outlook

The U.S. will release January Personal Consumption Expenditures (PCE) data at 20:30 Beijing time this Friday, March 13. Market forecasts point to: - A 2.9% year-over-year (YoY) rise and 0.3% month-over-month (MoM) gain for headline PCE; - A 3.1% YoY increase for core PCE (excluding food and energy), which would mark its largest jump since April 2024. Analysis notes that while recent Consumer Price Index (CPI) data showed modest inflation easing, PCE’s heavier weighting on goods—coupled with potential price hikes for items like software and jewelry—could push core PCE higher. If core PCE’s YoY reading is significantly above CPI, the gap between the two could hit a multi-decade high. Since the Federal Reserve prioritizes PCE for policy decisions, a rebound in inflation could dim expectations for interest rate cuts later this year. Additionally, the Middle East conflict has lifted oil prices, raising costs for energy, transportation and food—posing new upside risks to future inflation trends.