Via Nick Timiraos at the Wall Street Journal, a sneak peek early look at PCE inflation forecasts.
Timiraos adds:
- Economists who map the CPI and PPI into the PCE think core inflation for the Fed's preferred gauge will be around 0.26% in September, a touch below the Sept CPI (which was 0.31%) but the highest m/m reading since March
- Still, because this would be lower than the March 2024 or Sept 2023 readings, it would lower the 6-month annualized rate to 2.2% (from 2.4% in Aug) and the year-over-year rate to 2.6% (from 2.7%)
- Headline PCE is seen falling to 2.1% on a year-over-year basis.
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The data release is not due until October 31.
Goldman Sachs is optimistic:
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The Personal Consumption Expenditures (PCE) data is a key measure of inflation that tracks changes in the prices of goods and services purchased by consumers. It is reported monthly by the Bureau of Economic Analysis (BEA) and is a critical tool used by the Federal Reserve to assess inflation and guide monetary policy.
There are two main types of PCE data:
- Headline PCE: This measures the overall change in prices for all goods and services. It includes volatile components like food and energy, which can fluctuate sharply due to supply shocks, seasonal changes, or geopolitical events.
- Core PCE: This excludes the more volatile food and energy prices to provide a clearer view of underlying inflation trends. Core PCE is the preferred inflation gauge for the Federal Reserve because it gives a more stable picture of long-term inflation pressures.
PCE is similar to the Consumer Price Index (CPI), but PCE is broader in scope and reflects changes in consumer behavior, such as substituting products when prices rise.