Core PCE is forecast at 3.3% year-on-year, supporting a cautious, higher-for-longer Federal Reserve outlook

ZURICH, July 30 - Truflation, the independent, real-time economic data provider,  released its June U.S. Personal Consumption Expenditures Price Index (PCE) forecast, projecting flat headline inflation of 0.0% month-on-month and 3.7% year-on-year.

Key findings from Truflation’s June forecast include:

• Core inflation remained elevated: Core PCE, which excludes food and energy, is forecast to rise 0.2% month-on-month and 3.3% year-on-year, indicating that underlying inflationary pressures remain persistent.

• Services continued to drive underlying pressure: Healthcare and transportation costs rose during June, with transportation services recording the strongest monthly increase among the major categories tracked.

• Energy relief may prove temporary: Gasoline and energy goods prices fell 7.3% month-on-month, but renewed geopolitical tensions continue to pose upside risks to oil and gas prices.

Lower gasoline prices helped contain headline inflation during June as crude prices retreated and pump prices declined for five consecutive weeks following May’s increase.

Services inflation, however, remained resilient. Healthcare prices rose 0.26% month-on-month and 4.16% year-on-year, reflecting continued pressure from insurance, labor, and prescription drug costs. Transportation services increased 0.84% month-on-month and 11.0% year-on-year as airlines, transit systems, and ride-hailing platforms continued to pass through higher operating costs.

Softer prices in food services and accommodation, as well as furnishings and durable goods, provided some offset. Clothing and footwear prices were broadly unchanged on the month but remained 4.97% higher year-on-year as earlier tariff increases and higher import costs continued to feed through into retail pricing.

“The flat headline should not distract from the persistence of underlying inflation,” said Oliver Rust, Head of Data at Truflation. “Core inflation remains well above target, while healthcare and transportation services continue to place pressure on household costs. While this supports the case for the Federal Reserve to keep rates unchanged for now and maintain a higher-for-longer approach, any renewed energy pressures or a material upside inflation surprise could still bring further tightening back into consideration.”

Truflation’s PCE forecast draws on more than 15 million live price points that are updated daily from over 30 commercial and public data sources, using daily market-price data to provide an up-to-date view of inflation trends ahead of the official monthly release.