Upcoming PCE Inflation Report Signals Persistent Price Pressures

The Federal Reserve’s primary inflation gauge, the personal consumption expenditures (PCE) price index, is slated for release on Wednesday. Consensus forecasts from Dow Jones analysts anticipate a month-over-month rise of 0.3% for both the headline and core (excluding food and energy) measures. On an annual basis, the index is projected to show increases of 3.7% for all items and 3.3% for core, figures that match July’s readings and remain well above the Fed’s 2% target.

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At its most recent September meeting, the Federal Open Market Committee approved a 0.25-percentage-point rate hike and signaled the likelihood of at least one additional increase before year-end. The outlook reflects the Fed’s assessment that inflation remains “embedded” in the economy, limiting the central bank’s ability to deem price pressures abating.

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• Month-over-month change: +0.3% (headline and core) – Dow Jones consensus

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• Year-over-year change: +3.7% (headline), +3.3% (core) – unchanged from July

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• Fed target: 2% inflation rate

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These numbers suggest continued upward pressure on consumer prices despite resilient consumer spending.

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Fed Chairman Kevin Warsh highlighted broader economic health, noting that hiring, business investment, and private-sector earnings indicate a “good shape” economy.

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• “The Fed is going to look at this and say, 'Hey, you know, the core is not moving, and I don't have any expectations or anything to believe that it's going to start going back down in any sort of convincing way,'” — Dan North, senior economist at Allianz Trade

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• “I would be hard pressed to describe broad financial conditions as restrictive,” — Kevin Warsh, fed chairman

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