Analysts at Nomura are expecting a steady 0.2% (0.192%) m-o-m reading for US core PCE inflation in July and if realized, the 12-month change for core PCE prices would inch up to 2.0% (1.998%) from 1.9% (1.900%), previously.
Key Quotes
“The contribution from PPI data to core PCE price inflation will likely be small in July. PPI inflation for hospitals and physicians’ service prices remained muted in the month. In addition, PPI for financial service prices did not pick up strongly.”
“Although rent inflation from the July CPI report increased strongly, the relative importance of rent for PCE prices is smaller than that for the CPI.”
“Over the medium term, the pickup in core PCE inflation will likely be gradual given the stability of inflation expectations and only modest acceleration of wage inflation. Elsewhere, we expect a steady gain in PCE food prices but another decline in energy prices.”
“Altogether, we forecast a 0.2% (0.160%) m-o-m increase in the headline PCE price index, which would be equivalent to 2.3% (2.325%) y-o-y.”
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