March Inflation Data

EconEye Admin

2 years ago

The Bureau of Economic Analysis reports that from the preceding month, the PCE price index for March increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent. From the same month one year ago, the PCE price index for March increased 2.7 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.—Bureau of Economic Analysis

Answer the following questions to check your understanding of the story.

Which was the higher PCE price index inflation rate in March 2024: the annualized rate from February 2024 or the rate from March 2023?

a) Neither rate was higher as both rates are the same.

b) The higher rate can’t be determined without information about inflation in other months between March 2023 and February 2024.

c) The rate from March 2023 was higher.

d) The annualized rate from February 2024 was higher.

Wrong! - How do you calculate the annualized inflation rate when it price index rises by 0.3 percent per month for the past year?

Good Job! - The monthly rate from February was 0.3 percent, so the annualized rate was 3.7 percent (a bit more than 12 times the monthly rate).

Which was the higher PCE price index inflation rate in March 2024: the overall rate or the core rate?

a) The core rate was higher.

b) The overall rate was higher.

c) The higher rate can’t be determined without information about the separate inflation rates for goods and services.

d) Neither fate was higher as both rates are the same.

Wrong! - What is the definition of the core inflation rate? What in the CPI basket does it exclude? Does it exclude the prices of some goods or some services?

That's Right! - The core inflation rate is the overall rate excluding food and energy, so the core rate at 2.8 percent is higher than the overall rate at 2.7 percent.

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