PCE Index Preview: Key Inflation Gauge Ahead of Fed Chair Warsh's Jackson Hole Speech
The Bureau of Economic Analysis is set to release its Personal Income and Outlays report for July today, which will provide insight into the US inflation picture.
The data will be closely watched as it comes just two days ahead of Fed Chair Kevin Warsh's first Jackson Hole keynote address. The report includes the preferred inflation gauge of the Federal Reserve, which is the Personal Consumption Expenditures (PCE) index.
Consensus forecasts compiled by FactSet see headline PCE inflation rising 0.07% on the month, rebounding from June's 0.11% decline. The annual rate is expected to ease modestly to 3.6% from 3.7%. Core PCE, which strips out volatile food and energy prices, is forecast to rise 0.18% month on month.
Natixis chief US economist Christopher Hodge takes a slightly more hawkish view, forecasting headline PCE unchanged at 3.70% year on year. He notes that while broader tariff-related price pressure appears to be fading, computer hardware and software prices tied to the ongoing artificial intelligence and data centre investment boom continue to add to core inflation readings.