The Fed's favorite inflation indicator - Core PCE (a measure of price changes in consumer goods and services that excludes volatile food and energy costs) - rose o.4% MoM in January (in line with expectations) with YoY rising by 3.1% (as expected), slightly higher than the 3.0% in December...

Source Bloomberg

That is the highest YoY Core PCE since March 2024.

The headline PCE rose 0.3% MoM (as expected) driving prices up 2.8% YoY (down from December's +2.9% YoY)...

Source Bloomberg

Services continue to dominate the prices gains with Goods costs dropping very marginally in January...

Source Bloomberg

For those worried about the impact of crude oil's recent surge (since the start of the Iran war), it appears - somehow - that PCE's Energy component has already front-run a lot of the move...

Higher prices were met with higher incomes and higher spending (rising in line with one another for a change)...

On the income side, wage growth accelerated for both private and govt workers:

• Private worker salaries up 5.0% YoY in January, up from 4.8% in December

• Govt worker salaries up 2.3% YoY in Jan, up from 2.1% in Dec

Spending growth continues to outpace income growth

But, thanks to yet more revisions, the savings rate ticked up to its highest since July...

With rate-cut expectations already plummeting, this latest data will do nothing to support a dovish take going forward (unless oil crashes the global economy).