US PCE Estimates following July CPI
- Pantheon Macroeconomics: "We provisionally estimate that the core PCE deflator rose by 0.16% in July, dragging down the inflation rate to 3.2%, from 3.3% in June. Our estimate likely will shift slightly after tomorrow’s PPI data, but it would take a big upside surprise to leave an increase of more than 0.20% looking likely." in terms of the policy implications, they write that is "good enough" for the Fed to be on-hold in September.
Private-sector PCE nowcasts built from CPI inputs are a standard fixture between the CPI and PCE prints, and they have historically been directionally reliable even when the decimal place moves, since the core PCE deflator reweights and re-sources part of the CPI basket rather than simply restating it. The live sensitivity flagged here is PPI: the components that feed PCE through healthcare and portfolio management prices are what typically shift these estimates after the producer data, which is why a big upside PPI surprise is the named condition for the nowcast to move materially. On the policy read, the framing that a print of this kind is consistent with the Fed staying on hold in September follows the established pattern in which officials have treated gradual disinflation as sufficient to hold rather than to ease, with the bar for action set by persistence rather than any single report. Worth noting the distinction between the monthly run rate and the year-on-year rate: a soft monthly gain can still leave the annual rate elevated, and it is the monthly pace that has tended to carry the signal for near-term policy. The follow-ons are the PPI revision to this estimate, the PCE release itself, and whether officials echo the on-hold framing ahead of the September meeting. As a third-party estimate rather than a print, this is context-setting rather than market-moving in its own right.