PRIMER - US PCE Inflation data is due at 13:30BST/08:30EDT

The headline is seen rising +0.5% M/M (prev. 0.4%) and is seen rising to 4.1% Y/Y annualised (prev. 3.8%); the core measure is seen rising +0.3% M/M (prev. 0.2%), and the annual rate of core PCE is seen rising to 3.4% Y/Y (prev. 3.3%).
Writing after CPI and PPI numbers, WSJ’s Fedwatcher Nick Timiraos highlighted that with the May PPI and CPI in hand, forecasters expect core PCE to print around 0.35% M/M in May, which would raise the annual rate to 3.4% Y/Y. The six-month annualised rate would climb to 4.1%, the highest since June 2023.
Recent CPI and PPI headlines were hot, although the core measures were more contained. Still, analysts noted some areas of broadening price pressures outside of energy. Nonetheless, the data is for May and may be deemed as stale given the sharp weakness seen in energy prices in June so far, as the US and Iran came to an agreement to end the war. There are still risks ahead, however, particularly if the stage two talks on nuclear issues do not yield positive results and the war resumes, or if the return of oil through the Hormuz is slower than expected.
Meanwhile, after the latest FOMC policy announcement, there has been added focus on inflation from Fed officials; the statement was completely rewritten to remove forward guidance, but it did stress that it “will deliver price stability”. Meanwhile, the updated rate projections shifted hawkishly, with the median now pencilling in one rate hike this year (vs one rate cut in the previous SEP). Additionally, new Chair Warsh stressed several times in his Q&A that the Fed is committed to bringing inflation to target. The hawkishness of the Fed and the enhanced focus on price stability will make inflation even more important ahead.