US PCE preview estimates point to a firmer May core reading, with forecasters expecting core PCE to rise about 0.35% and the annual rate to reach 3.4%.
WSJ’s Timiraos said forecasts now center on that monthly gain after the May CPI and PPI reports. As a result, the six-month annualised core rate would climb to 4.1%, which would be the highest since June 2023. Recent CPI and PPI data ran hot on the headline figures, although the core details were more contained.
US PCE Preview Tracks CPI and PPI
Oxford Economics said its read of CPI, PPI and import price data points to a 0.5% rise in headline PCE prices. It also sees core PCE increasing 0.4% in May. However, the source noted that the May data may look stale because energy prices weakened sharply in June.
That shift followed what the article described as an agreement between the US and Iran to end the war. Even so, the report said risks remain if stage two nuclear talks fail or if oil flows through Hormuz return more slowly than expected. Therefore, inflation data still carries added weight for markets.
Fed Focus Adds Weight to US PCE Preview
The source said attention on inflation increased after the latest Fed rate decision. It said the statement was fully rewritten to remove forward guidance, while also stressing that the Fed will deliver price stability. Meanwhile, the dot plot showed a hawkish shift, with the median now indicating one rate hike versus one rate cut before.
The article also said Chair Warsh repeatedly stressed a commitment to return inflation to target. Because of that stance, the upcoming PCE release becomes more important. Oxford Economics added that with gas prices now falling back, May should mark the peak in inflation this year.
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