US PCE nowcast – Energy shock offsets gradual core disinflation
PCE inflation remains steady despite rising oil prices, with signs of continued moderation in services costs. Explore the latest insights on inflation trends.
Headline PCE inflation is projected to remain steady at 3.7% in August, despite rising global oil prices. Core PCE inflation is expected to hold at 3.3%, with notable contributions from increased airfare and wireless service costs.
Methodology changes in the upcoming PCE report are anticipated to reveal a more positive outlook on inflation, potentially reducing core PCE by 0.2 percentage points. Higher energy prices pose a risk to inflation forecasts, but if oil prices decline, inflation could approach the Federal Reserve’s target of 2% by year-end.
The report indicates that while energy costs have surged, their impact on the PCE index is limited compared to the CPI. Meanwhile, services inflation shows signs of further moderation, which will be aided by a labor market that is far from overheating.
Download the report for more detailed insights.
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