Published on: 2026-03-13
The US PCE report for January 2026 will be released today, March 13, at 8:30 a.m. Eastern Time as part of the Personal Income and Outlays release. The report is delayed because the BEA implemented a revised schedule following the January shutdown.
This delay is significant because markets have already received February CPI data before the release of the Fed's preferred January inflation measure. With the next Federal Reserve meeting set for March 17-18, this delayed report is immediately relevant to policy.
The Street is not looking for disaster. It is looking for a number that is firm but manageable. December PCE ran hot enough to remind traders that inflation did not die in 2025: headline PCE rose 0.4% month on month and 2.9% year on year, while core PCE, which strips out food and energy and is the Fed's preferred underlying gauge, also rose 0.4% on the month and 3.0% on the year.
| Metric | December 2025 (Prior) | January 2026 (Consensus Est.) |
|---|---|---|
| Headline PCE (YoY) | 2.9% | ~2.9% |
| Core PCE (YoY) | 3.0% | ~2.9%–3.1% |
| Core PCE (MoM) | +0.4% | ~+0.3%–+0.4% |
| Personal Income (MoM) | +0.3% | ~+0.4% |
| Personal Spending (MoM) | +0.4% | ~+0.3%–+0.4% |
Consensus is not calling for a clean break in inflation. It is calling for a print that looks slightly better on the headline, but still sticky on the core. That is not the same as a market-friendly all-clear.
If core PCE remains near 0.4% MoM, the annual pace is still too high for a Fed that wants durable progress back to 2%.
CPI
January CPI looked reasonably soft at first glance, with headline CPI up 0.2% month on month and 2.4% year on year, while core CPI rose 0.3% month on month and 2.5% year on year.
Shelter rose 0.2%, which was encouraging, but services still carried pressure from categories such as airline fares, up 6.5%, and medical care, up 0.3%, including physicians' services, up 0.3%. That is exactly the kind of mix that can leave PCE looking less benign than CPI.
The PPI side of the story did not look especially calm. January producer prices rose 0.5% month on month and 2.9% year on year. Final demand services rose 0.8%, which was the biggest increase since July 2025, while final demand goods fell 0.3% because energy prices dropped.
At the same time, goods other than food and energy still rose 0.7%, suggesting the goods story was not as soft as the headline suggested.
Services were the bigger problem, with strength tied to margins and categories that can bleed into PCE. That mix does not scream "inflation solved." It says core pressure may be rotating, not disappearing.
January retail sales fell 0.2% from the prior month, which says the consumer is no longer powering through everything.
This is significant because it indicates that while demand is beginning to slow, inflation remains not fully under control. Traders know that mix well. It is the kind of backdrop that makes the Fed cautious and markets jumpy.
The labor market has softened as February payrolls decreased by 92,000, while the unemployment rate remained steady at 4.4%. That is not recession-proof. It is the sort of data that usually argues for easier policy later on, unless inflation stays sticky enough to pin the Fed in place.
That is why today's core PCE number matters more than the headline. It indicates whether the Fed is addressing a growth slowdown, an inflation issue, or both.
The U.S. and Israel attacked Iran on February 28, causing oil prices to soar and raising prices for gasoline and other types of fuel, which complicates the inflation picture heading into the Fed's March meeting.
The January PCE data predates that conflict, so energy components in today's report should still reflect a calmer oil environment. But every trader in the room knows that the February PCE print, due in April, will carry those energy shocks. Today's data represents the last reading before the energy spike.
Tariffs are the other structural pressure. The implementation of broad tariffs has begun to filter through to consumer goods, and energy costs have become a volatile wildcard. Unlike traditional demand-pull inflation, tariff-driven inflation is a supply-side shock that the Fed cannot easily control with interest rates alone.
That is the wall the Fed is staring at: raising rates fights demand, but tariff inflation is a supply problem. Cutting rates risks accelerating prices. Neither move is clean.
The Federal Reserve held rates steady at its January 28 meeting, maintaining the federal funds rate at 3.50% to 3.75% following three rate cuts in 2025. Fed Chair Jerome Powell stated it was "hard to look at the data and say that policy is significantly restrictive right now."
The FOMC meets on March 17–18, and market participants are pricing in a 92% probability that the central bank will maintain the status quo at its March meeting. A rate hold is widely expected, and there is no indication that market participants anticipate a cut on March 18.
The key question is what the updated dot plot will reveal. These projections will provide the first clear indication of whether the committee still expects cuts later in 2026, or if recent tariff and oil shocks have led to a more prolonged pause.
Here is the scenario matrix traders should run through after today's print:
| Scenario | What the data would look like | Likely first reaction | What it means |
|---|---|---|---|
| Soft | Core PCE at 0.2% to 0.3% | 2-year yield lower, dollar softer, equities firmer | The market leans back toward midyear cuts |
| In line | Core PCE around 0.4% | Limited relief, choppy equities, bonds only modestly better | Sticky core keeps the Fed in wait-and-see mode |
| Hot | Core PCE at 0.5% or above | Front-end yields up, dollar up, equities down | Fewer cuts get priced, and the inflation scare grows |
J.P. Morgan strategists do not anticipate a rate cut until summer 2026 at the earliest. Goldman Sachs had been more optimistic earlier, forecasting cuts in the second half of the year contingent on tariff pass-through ending by mid-2026. A hot print today moves that timeline out.
The base case is roughly 0.3% MoM for headline PCE and 0.4% for core PCE, which would likely keep headline inflation near 2.9% YoY and push core inflation to about 3.1%.
The BEA postponed the release of January's Personal Income and Outlays due to changes in the economic calendar following the shutdown. That is why the January PCE report is being published on March 13 rather than at its usual earlier date.
Probably not by itself. The Federal Reserve has indicated that inflation remains somewhat elevated, and markets continue to expect interest rates to stay between 3.50% and 3.75% next week.
In conclusion, today's US PCE report will indicate to the markets whether the Federal Reserve's preferred measure of inflation remains stubborn, even as the CPI appears to show signs of easing.
While the headline figure may seem stable, the underlying core trend still looks challenging, particularly if healthcare and financial services continue to exert pressure on the January reading.
For traders and investors, the cleanest question is not whether the Fed cuts in March. It is whether today's report keeps the path to later easing open.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
