Economic Outlook and Inflation Insights

RBC Chief Economist Francis Donald shared insights on the economic landscape, including his predictions for U.S. GDP and inflation risks ahead. He noted the nuances of the labor market and consumer spending, which are leading to economic polarization.

This article addresses the evolving situation regarding March 2026 PCE Inflation, and updates will follow as more details become available.

Consumers are still grappling with climbing prices, which remained persistently high in March, according to a report from the Department of Commerce.

The Personal Consumption Expenditure (PCE) index increased by 0.7% month-over-month in March, and rose 3.5% compared to the same month last year. These figures matched the expectations set by economists surveyed by LSEG.

Core PCE, which omits the more volatile food and energy sectors, saw a month-on-month rise of 0.3% and an annual increase of 3.2%. Again, these figures were in line with the predictions from the LSEG survey.

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Fed officials are closely monitoring the headline PCE figures as they aim to steer inflation back to their targeted 2%. They consider core data to be a more reliable measure of inflation. Compared to February, March’s headline PCE jumped from 2.8% to 3.5%, while core PCE increased from 3% to 3.2%.

In terms of commodity prices, March saw a year-on-year rise of 0.7% and a month-on-month increase of 1.4%.

Service prices also escalated, rising by 2.8% year-on-year and 0.3% month-on-month.

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The Bureau of Economic Analysis (BEA) indicated that headline PCE inflation increased by 3.5% year-on-year in March, while core PCE rose by 3.2%.

The personal savings rate, relative to disposable income, dipped to 3.6%, a step down from 3.9% in February and 4.5% in January.

Since the beginning of 2025, this rate has decreased from a high of 5.5% in April 2025 to 5.1% in January 2025.

Expert Analysis

Heather Long, chief economist at Navy Federal Credit Union, pointed out that while the economy is visibly buoyed by substantial investments in AI, inflation continues to climb.

“At the same time, on Main Street, folks are facing the highest inflation in three years, alongside gas prices nudging back to $4.30. Many households see about $70 more on their monthly gas bills. A significant portion of those hefty tax refunds has already gone toward these increased gas costs,” she commented. “The one silver lining is that layoffs remain low, but a slowdown in consumption to just 1.6% in the first quarter is quite concerning.”

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Brett Kenwell, an investment analyst at eToro, remarked, “While the headline PCE numbers align with expectations, it doesn’t really alleviate the burden on consumers.”

“Despite year-over-year rates hitting nearly three-year highs, the inflation on goods remains a pressing issue. Durable goods inflation has shifted from deflation to inflation since May 2025 and shows no signs of slowing down, while non-durable goods inflation has surged due to rising energy costs,” he elaborated.