Consumer Staples Prices Inflating

The good news is that the headline PCED inflation rate fell sharply to 4.2% y/y during March (chart). The bad news is that the core PCED inflation rate edged down to 4.6%. We aren't changing our forecast for headline inflation this year. We are still expecting to see it fall below 4.0% soon and closer to 3.0% later this year.

The PCED durable goods inflation rate seems to be stabilizing just north of zero in recent months (chart). But the PCED nondurable goods inflation rate excluding food and energy has rebounded lately.