US PCE Prices Poised for First Monthly Decline Since 2020

The US Personal Consumption Expenditures (PCE) price index is likely to decline for the first time since April 2020, according to a recent forecast. The PCE price index is expected to fall by 0.1% month-over-month in June, after rising 0.4% in each of the previous two months.

The ceasefire between the US and Iran in June has helped ease energy-related inflationary pressures, leading to lower gasoline prices. As a result, the headline PCE price index is projected to ease to 3.7% from 4.1% in May, when it reached its highest level since April 2023.

The core PCE price index, which excludes food and energy, is expected to rise by 0.2%, the smallest monthly increase in seven months. This moderation in inflationary pressures is a welcome development for the Federal Reserve, which has been monitoring PCE inflation closely.