Summary
The Federal Reserve’s favorite inflation indicator, the PCE Price Index, will be released this morning. The PCE Index differs from the better-known Consumer Price Index because its composition is changed more frequently and thus is quicker to reflect the impact of real-time pricing fluctuations. In the most-recent report, through May, PCE inflation was reported at 2.6% year over year. By comparison, the latest CPI report, through June, had inflation at 3.0%. Core PCE, which removes volatile food and energy prices, was at 3.0% in the latest month. Our PCE forecasts call for 2.4% for both the headline number and for the core reading — down slightly month to month as progress toward the Fed’s 2% goal gets harder as the target gets closer. Overall, inflation in this cycle peaked in summer 2022 and has been on a downward trek until plateauing recently. We track 20 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 2.9% rate year over year, up 14 basis points versus a month ago. The numbers are volatile and are distorted somewhat by ultra-low readings within the Producer Price Intermediate Goods category, which are falling at a 0.5% rate and may well point to easing prices across the inflation spectrum in the months ahead. Focusing on core inflation — which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy (from the GDP report), the five-year forward inflati
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Source: finance.yahoo.com