US PCE nowcast – Past the oil-shock peak
PCE inflation is set to slow down, influenced by lower energy prices, while core goods inflation remains high due to tech demand. Discover more insights.
Headline PCE inflation is projected to decelerate to 3.7% year-on-year in June, following a peak of over 4% in May. This decline is primarily driven by lower energy prices, which have a smaller weight in the PCE index compared to the CPI.
While energy prices, including a nearly 10% drop in motor fuel costs, are providing relief, core goods inflation remains elevated due to a memory chip shortage linked to AI demand. The Federal Reserve is likely to maintain its current stance until late 2027, anticipating sustainable progress towards its 2% inflation target.
In June, core PCE prices are expected to rise by 0.2%, influenced by increases in computer software and accessories. The upcoming methodological changes in September may lead to downward revisions in core goods inflation, particularly in the technology sector.
Download the report for more detailed insights.
