People
purchase
beverages
in
a
store
on
a
sweltering
afternoon
in
Brooklyn,
New
York,
on
the
first
day
of
summer
on
June
21,
2024.
Spencer
Platt
|
Getty
Images
There
could
be
some
pretty
good
inflation
news
on
the
way
from
the
Commerce
Department
when
it
releases
a
key
economic
report
Friday.
The
personal
consumption
expenditures
price
index,
an
inflation
measure
the
Federal
Reserve
watches
closely,
is
expected
to
show
little,
if
any,
monthly
increase
for
May,
the
first
time
that
would
be
the
case
since
November
2023.
But
even
more
importantly,
when
stripping
out
volatile
food
and
energy
prices,
the
core
PCE
price
index,
which
draws
even
closer
scrutiny
from
Fed
policymakers,
is
set
to
indicate
its
lowest
annual
reading
since
March
2021.
If
that
date
rings
a
bell,
it’s
when
core
PCE
first
passed
the
Fed’s
coveted
2%
inflation
target
during
this
cycle.
Despite
a
series
of
aggressive
interest
rate
increases
since
then,
the
central
bank
has
yet
to
wrest
the
pace
of
price
increases
back
into
its
target
range.
The
official
Dow
Jones
forecasts
for
Friday’s
numbers
are
for
the
headline,
or
all-item,
PCE
price
reading
to
come
in
flat
on
the
month,
while
core
is
projected
to
rise
0.1%.
That
would
compare
to
respective
increases
of
0.3%
and
0.2%
in
April.
Both
headline
and
core
are
forecast
at
2.6%
on
a
year-over-year
basis.
Should
the
core
PCE
price
forecasts
transpire,
it
will
serve
as
a
milestone
of
sorts.
“We
are
in
line
with
[the
forecast]
that
the
PCE
core
pricing
data
will
come
in
soft,”
said
Beth
Ann
Bovino,
chief
economist
at
U.S.
Bank.
“That’s
good
news
for
the
Fed.
It’s
also
good
for
people’s
pocketbooks,
although
I
don’t
know
if
people
feel
it
just
yet.”
Indeed,
while
the
rate
of
inflation
has
receded
precipitously
from
its
mid-2022
peak,
prices
have
not.
Since
that
March
2021
benchmark,
core
PCE
is
up
14%.
That
steep
climb
and
its
pernicious
effect
is
why
Fed
officials
are
not
ready
to
declare
victory
yet,
despite
the
obvious
progress
made
since
the
rate
hikes
began
in
March
2022.
“Returning
inflation
sustainably
to
our
2%
target
is
an
ongoing
process
and
not
a
fait
accompli,”
Fed
Governor
Lisa
Cook
said
earlier
this
week.
Cook
and
her
colleagues
have
been
circumspect
about
the
timing
and
pace
of
rate
cuts,
though
most
agree
that
easing
is
likely
at
some
point
this
year
as
long
as
the
data
stays
in
line.
Futures
markets
are
currently
pricing
in
a
good
likelihood
that
the
Fed
will
enact
its
first
quarter-percentage-point
cut
in
September,
with
another
to
follow
by
the
end
of
the
year.
Policymakers
at
their
meeting
earlier
this
month
penciled
in
just
one
cut.
“We
do
expect
softening
in
the
real
economy
—
not
falling
off
a
cliff,
just
softening
—
that
suggests
that
inflation
will
be
softer
as
well
later
on.
That
gives
us
reason
to
expect
the
Fed
will
be
able
to
likely
have
their
first
cut
in
September,”
Bovino
said.
“Now
we
all
know
it
depends
on
the
data
and
the
Fed
is
still
watching,”
she
added.
“Could
they
wait?
Could
it
just
be
a
one
and
done
this
year?
I
can’t
rule
it
out.
But
it
does
look
like
the
numbers
might
give
the
Fed
cover
to
cut
rates
two
times
this
year.”
In
addition
to
the
inflation
numbers,
the
Commerce
Department
at
8:30
a.m.
ET
will
release
figures
on
personal
income
and
consumer
spending,
with
estimates
at
a
rise
of
0.4%
and
0.3%,
respectively.
