Fed’s Main Inflation Gauge to Get Boost From Rally in Stocks

(Bloomberg) — The Federal Reserve’s main inflation gauge is set to receive a boost from the rally in US stocks late last year, based on data published Friday.

Prices of portfolio management and investment advice jumped 5% in January, according to a monthly Bureau of Labor Statistics report on producer prices. That category — which is calculated using reported market returns — feeds directly into the US central bank’s preferred inflation measure based on personal consumption expenditures, set to be published on Feb. 29.

Market Rally Boosts US Inflation Data | PPI component follows stocks with one-month lag

Other categories that carry over into personal consumption expenditures gauge also rose in the producer-price data, including certain health-care services components.

Analysts raised their estimates for the so-called core PCE price index Friday after the release of producer price report. Citigroup Inc. now predicts a 0.38% increase in the measure, the bank’s chief US economist, Andrew Hollenhorst, said in a note to clients. JPMorgan sees the index, which excludes food and energy, rising 0.47%, according to economist Daniel Silver.

Either estimate would mark the biggest monthly increase for core PCE since early last year.

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