Written by Millan Chauhan.

The latest figures released by the Commerce Department Bureau of Economic Analysis in the U.S. revealed that the personal consumption expenditure (PCE) price index figure increased by 2.4% in the 12 months to January 2024, in line with expectations. The core PCE price index (which excludes food and energy) rose 2.8% in the 12 months to January 2024. If you remember in mid-February, it was announced that US inflation figures for  the 12 months to January came in at 3.1% which was above expectations of 2.9%. The U.S. market responded positively to the latest PCE price index figures and the fact they were in line with expectations, as the S&P 500 returned +1.4% last week in GBP terms. The Federal Reserve are set to meet on the 19th-20th March where it will decide the trajectory of U.S. interest rates. We are set to receive one further U.S. inflation print on March 12th, ahead of this much anticipated meeting.

Elsewhere, in Europe, the inflation rate declined to 2.6% in the 12 months to February 2024, slowing from 2.8% in the previous month, however this was still above expectations as inflation is proving to be stickier than initially expected. Energy prices declined 3.7% over the month but food, alcohol and tobacco inflation remain high at 4% and services inflation still remains at 3.9%. Core inflation in Europe was announced at 3.1% with expectations at 2.9% and is a critical measure used by the European Central Bank who are set to meet this Thursday where expectations are that interest rates will be held at 4.5%.

In the UK, house prices increased for the first time since January 2023 according to Nationwide’s House Price Index which rose 1.2% in the 12 months to February 2024 as borrowing costs declined.

There has been much speculation as to what the UK Budget has in store for us with talks of cuts to personal taxes and national insurance. The Chancellor of the Exchequer, Jeremy Hunt is set to unveil his list of measures on Wednesday.

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