US PCE Nowcast – Expect the hottest reading since early 2023

April’s PCE index is projected to show the highest inflation rate since May 2023, with headline inflation expected to rise to 3.8% year-on-year and core inflation reaching 3.3%. This increase is largely driven by higher energy prices, particularly in motor fuel.

While energy prices will significantly impact the PCE, their lower weight in the index compared to the CPI means the month-over-month rise will not be as pronounced. Core goods prices, notably computer software, are anticipated to increase by 0.3% month-on-month, reflecting ongoing demand linked to AI
developments.

The report highlights that the CPI and PCE will diverge this year, with the CPI experiencing greater volatility due to energy’s larger share. Conversely, core PCE is expected to rise faster than core CPI, influenced by surging computer software prices and disinflationary trends in shelter costs.

Download the report for more detailed insights.