The PCE is preferred over the consumer price index (CPI) because it considers changes in consumer behaviour, such as substituting goods, and provides a more comprehensive view of inflation.
For July, the Dow Jones consensus expects the PCE to show little change from recent trends. Both headline and core prices are anticipated to increase by 0.2 percent month-over-month, with annual gains of 2.5 percent for headline inflation and 2.7 percent for core inflation.
The forecast for core PCE suggests a slight increase from June, while the all-items measure remains steady.
If these readings match the forecasts, they are unlikely to deter the Fed from implementing the expected interest rate cut at their September 17-18 meeting
Beth Ann Bovino, chief economist at US Bank, commented that the data would likely serve as further confirmation that inflation is stabilizing. She noted that any minor increases would likely be due to base effects and would not change the Fed’s outlook.