Capital Economics: The PCE inflation index favored by the Federal Reserve is expected to be weak

While the US core CPI rose 0.3% month-over-month in August, the Federal Reserve's preferred inflation gauge, the core PCE inflation index, likely rose by less than 0.2% last month. This is the conclusion reached by analysts after examining the CPI and PPI data released this week. If they are correct, the year-over-year core PCE inflation rate in August could stabilize at 2.9%, which could lead the Fed to adopt a more optimistic view on price pressures at its September meeting. Capital Economics analyst Stephen Brown wrote: "In short, core PCE inflation remains on track and will not deteriorate from the Fed's June forecast of rising to just above 3% by the end of the year." (Jinshi)