US PCE Nowcast – Oil price impact won’t be visible until March

Our PCE nowcast estimates that the year-over-year headline PCE will hold steady at 2.8%, while core PCE will inch lower to 3%. Our updated estimate shows a 0.4% gain in both headline and core PCE prices in February.

• We expect higher oil prices to push headline PCE inflation as high as 3.7% in Q2.
• Core goods prices are on track to see the largest monthly gain since January 2022, mostly due to a significant rise in computer software and accessory prices, which are counted as goods in the PCE measure.
• With most of the tariff pass-through to consumer prices behind us, goods inflation will be driven by other factors like AI demand and high oil prices.