Buried in the gross domestic product report released Thursday were two new measures of inflation — and they both seem to be showing that the disinflation trend is continuing.
The Commerce Department for the first time reported price indexes for PCE excluding food, energy, and housing, and PCE services excluding energy and housing. The government said it was breaking out the information based on requests from data users. Federal Reserve officials including Chair Jerome Powell say they are closely looking at inflation trends in non-housing services.
At an annual rate, the PCE price index excluding food, energy and housing slowed to a 3% rate in the second quarter from 4.1% in the first quarter, and PCE services excluding energy and housing slowed to a 3.5% rate from 5.1%. Fed officials often say that core measures of inflation tend to be better predictors of future inflation than the so-called headline measures.
Powell, at his last press conference, talked about looking at core inflation in three buckets.
“If you look at June, July, and August, you’re looking at, you know, really significant declines in core inflation, largely in the goods sector, also to some extent in housing services, and just a little in non-housing services,” he said. “Those are the three buckets.”
The broader core PCE price index was 3.7% for the second quarter, unrevised from previous estimates.
Read the full article here