US core PCE inflation may drop after BEA methodology overhaul

core PCE inflation BEA methodology change inflation revision portfolio management services legal services pricing

The U.S. Bureau of Economic Analysis (BEA) announced it will revise the way it calculates components of the Personal Consumption Expenditures (PCE) price index, affecting portfolio‑management and investment‑advice services, legal services, and computer software and accessories. The new methodology will be applied in the annual GDP revisions due on September 30 and will be back‑dated to 2021.

Economists expect the change to trim the May year‑on‑year core PCE inflation rate. Goldman Sachs projects a reduction to 3.2% from the 3.4% previously reported, while JPMorgan anticipates a modest decline to about 3.3%. The BEA will shift from relying solely on the Consumer Price Index to a composite index that incorporates both CPI and Producer Price Index data for the affected categories, aiming for more accurate deflation estimates.

Sources

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