Wednesday, September 30, 2026

Inflation: "Core PCE Prints Cooler Than Expected Due To Change In Methodology, As Savings Rate Plunges To 3 Year Low"

From ZeroHedge, September 30: 

Ahead of today's closely watched core PCE report - the Fed's (reportedly) favorite inflation indicator (although that will probably shift to Truflation after Kevin Warsh's task force is done with analyzing the data), which was seen by many as deciding whether the Fed will hike in October and December, or just December as NY Fed president John Williams strongly hinted yesterday, we warned readers that PCE may surprise to the downside: "the Bureau of Economic Analysis updated methodology for calculating inflation in three components is expected to trim August year-on-year change by a few tenths of a percentage point."

And surprise it did, because despite rampant energy inflation and record diesel prices, headline PCE came in line sequentially, printing up 0.3%, in line with expectations but coming in far cooler than expected on an annual basis, rising just 3.4%, vs expectations of a 3.7% print.

The MoM jump in headline PCE was driven by services, a reversal from last month's drop, largely due to the spike in communication and education services....

*** 

But it was the far more important core PCE, which strips out volatile energy and food prices, that rose 0.2% MoM (technically 0.247%, below the +0.3% MoM expected) with a notable miss in the YoY print, which dropped to +3.0% from the unrevised 3.3% (now revised to 3.0%), missing estimates of a 3.3% print.

Within core, the biggest jump was again communications and education services....

....MUCH MORE 

The market reaction to the release brings to mind Dr. Evil's demand, and more especially the reaction thereto, in the third Austin Powers movie (Goldmember):

"1 billion, gagillion, fafillion, shabolubalu million illion yillion....Yen."
about which Wikipedia says:
"This time his demand is met with simple confusion from the world leaders."
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