In January, the US Personal Consumption Expenditures (PCE) core rate rose by 2.6%, matching expectations. Monthly core PCE increased by 0.3%, with unrounded figures showing a rise of 0.285%.

Headline PCE also came in at 2.5% year-on-year, consistent with forecasts. Personal income saw an increase of 0.9%, surpassing the expected 0.3%, while personal spending declined by 0.2%.

Real personal spending fell by 0.5%, with the savings rate rising to 4.6% from 3.8%. Vehicle spending dropped, potentially due to adverse weather, with expectations of recovery as conditions improve.

These numbers provide a precise view of inflation and consumer behaviour at the start of the year. A 2.6% rise in core PCE suggests that price increases remain steady, aligning with what was widely anticipated. The monthly increase of 0.3%, with an unrounded 0.285%, reinforces this stability. No unexpected shifts mean the broader trend is still in place, without indications of accelerating or slowing inflation pressure beyond what was predicted.

Annual headline PCE at 2.5% confirms that general price growth remains in check, providing another piece of data in line with forecasts. While core figures strip out the more volatile food and energy components, headline numbers offer a view of overall cost changes faced by households. With both coming in as expected, there is little in this release to suggest any abrupt adjustments in economic assumptions.

Income growth stood out, rising by 0.9% when only 0.3% was expected. A result like this indicates that people earned more than originally thought, whether through wages, investments, or other means. However, personal spending dropped by 0.2%, meaning that additional earnings weren’t immediately channelled into consumption. Instead, more was set aside, as reflected by the rise in the savings rate from 3.8% to 4.6%.

A steeper drop in real personal spending, down 0.5%, points to inflation-adjusted consumption pulling back even further. Within this, vehicle purchases saw particular weakness, which may have been a result of harsh weather conditions making it difficult for buyers to visit dealerships. If weather was indeed the key reason, demand should return as conditions normalise.

For the weeks ahead, these figures offer a clear reference point. Inflation is not deviating from expectations, spending has softened slightly, and households chose to save more of their income. Each of these trends will be watched closely for confirmation or adjustment as new data emerges.