PCE Price Index Release: What to Expect This Friday

The personal consumption expenditures price index, a key inflation measure, will be released by the Commerce Department on August 30, 2024, at 8:30 a.m. ET. This index is crucial for the Federal Reserve as it reflects consumer spending patterns and price changes across a wide range of goods and services. For the July reading, analysts predict a 0.2% increase in both headline and core prices, with annual increases of 2.5% and 2.7%, respectively. The Federal Reserve closely monitors this index as it serves as their primary forecasting tool for inflation. Unlike the consumer price index from the Labor Department, the PCE index accounts for shifts in consumer behavior, making it a more comprehensive measure. Recent statements from Fed officials suggest a cautious optimism regarding inflation trends, although they have not declared victory yet. Fed Chair Jerome Powell indicated a growing confidence that inflation is moving back toward target levels, while also acknowledging the need to focus on employment and economic stability. This shift in focus may lead to less emphasis on the PCE readings and more attention on upcoming employment data. As the Fed prepares for its September 17-18 policy meeting, the PCE report will provide additional context for their decision-making process. If the readings align with forecasts, it may support the anticipated interest rate cut, reflecting the Fed's ongoing efforts to balance inflation control with labor market stability.