The Federal Reserve Bank of Cleveland published an Economic Commentary concluding that “non-market” components of the personal consumption expenditures (PCE) price index helped keep overall PCE inflation elevated in 2023 and 2024, even as market-priced components drove disinflation alongside a gradual loosening in labor market conditions. The analysis by Randal Verbrugge and Saeed Zaman distinguishes between PCE components based on observed market prices and non-market components that must be imputed. It finds that non-market inflation showed far less deceleration over 2023 and 2024, partly because some non-market components, particularly imputed financial services, are strongly correlated with stock market performance and remained elevated amid strong equity returns.

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