Another PCE Inflation Report Arrives Today: Here’s What To Expect

“Although inflation has moved down from its peak—a welcome development—it remains too high.” said Jerome Powell, the Chair of the Federal Reserves at the Jackson Hole Symposium last week


The inflation fever is cooling down but is still above the 2% target in the United States after reaching decade highs. The core PCE, which excludes food and energy prices, cooled down last June and only increased at 0.2 %, the lowest rate since December 2022. However, it is expected to have stayed the same during July at 0.2%. Last June, the annual rate increased by 4.1%, also the lowest recorded since September 2021, and it was slightly lower than the market's anticipated rate of 4.2%.  


The cooldown is slightly comforting for investors. However, as Jerome Powell implied at the Jackson Hole Conference stating” The lower monthly readings for core inflation in June and July were welcome, but two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We can't yet know the extent to which these lower readings will continue or where underlying inflation will settle over coming quarters. Twelve-month core inflation is still elevated, and there is substantial further ground to cover to get back to price stability.”


Tighter monetary policy, the highest level since January 2001, helped core goods inflation, housing prices, and non-housing services, which represent more than half of the core PCE index to cool. But further tightening could be expected, because as the economy recovers from the supply chain bottlenecks caused by either the pandemic or the Russia-Ukraine war, growth is projected. This fact could warrant further restrictions.




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