The Federal Reserve Bank of Cleveland published research finding that the personal consumption expenditures (PCE) price index shows persistent “residual seasonality”, with monthly inflation readings tending to run higher in January and lower in November and December even after seasonal adjustment. The pattern could complicate interpretation of month-to-month PCE inflation data. Using data since 1987, the report finds average headline PCE inflation of 0.26 percent in January, compared with 0.13 percent in December and 0.10 percent in November. Similar seasonality appears, to a lesser extent, in four other PCE inflation measures, with differences described as economically large and statistically significant, and potentially giving the impression that inflation is unusually soft at year-end before jumping at the start of the year.
Federal Reserve Bank of Cleveland 2025-03-26
Federal Reserve Bank of Cleveland report finds residual seasonality in PCE inflation with January running hotter than November and December
Research from the Federal Reserve Bank of Cleveland shows persistent residual seasonality in the PCE price index, with higher inflation in January and lower in November and December, despite adjustments. Data since 1987 reveals average headline PCE inflation of 0.26% in January versus 0.13% in December and 0.10% in November, complicating month-to-month interpretation. Similar patterns in other PCE measures indicate significant economic and statistical differences.