Core PCE excludes the impact of volatile energy and food costs. As such, it's a better indicator of ongoing inflation than the all-in metric which can swing low or high depending on gas prices, food costs, etc.

This reading of 3.4% is well above the Fed's target of 2%. We heard Kevin Warsh recently indicate the Fed will prioritize price stability. Reading between the lines, that means rates could be headed up. Also look for the Fed to dial back on excessive liquidity in the financial system that can fan the flames of inflation.

Politically, despite the free-riders who suck from the government teat, there's still a lot of people who pay their bills -- or try to -- and they're fully aware of these price pressures. More important is probably the direction of inflation... does it feel like it's getting better or worse? Recent core PCE and CPI prints -- which have nothing to do with gas prices -- suggest it's going the wrong way.

Quote:

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The Federal Reserve's primary price gauge rose at its highest level since 2023, reinforcing the central bank's recent tough talk on inflation.

Excluding food and energy, the personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month, both in line with Dow Jones consensus. The core reading was the highest since October 2023.

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https://www.cnbc.com/2026/06/25/pce-inflation-report-may-2026-.html

What was the price of oil? What is it now?

Ag_of_08 said:

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Always excuses.. reasons

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fify

"Reading between the lines, that means rates could be headed up."

Or down.

https://fred.stlouisfed.org/graph/?g=1WYLP



There's a reason the homebuilder stocks have rallied strongly over the last month.

So, should we always be concerned just with core inflation, or should we never be concerned with core inflation. My head is spinning on which metric is correct here.

I would think that both core and "all-in" are useful.

MemphisAg1 said:

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B-1 83 said:

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What was the price of oil? What is it now?

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This is core PCE. Gasoline has nothing to do with it. Oil is relevant only to the extent that it's used in products like plastics and clothes that have higher costs because of oil, which will be minimal.

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Since when does spiking oil prices not impact the economy in all aspects and products - not just direct energy costs and ag commodities? AI seems to think t has an impact….
"Personal Consumption Expenditures (PCE) inflation rises primarily due to stronger consumer demand, supply chain disruptions, escalating service sector costs, and spikes in volatile commodities like energy"

Aggie Spirit said:

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"Reading between the lines, that means rates could be headed up."

Or down.

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LOL

I don't think Trump will allow his boy to raise rates.

core

Logos Stick said:

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core

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Even then….
"high oil prices indirectly impact core PCE by increasing production, shipping, and manufacturing costs, which businesses eventually pass on to consumers. Even though core inflation strips out food and energy to measure underlying trends, these secondary spillover effects still drive up the prices of core goods and services"

Oil drives our economy in so many ways.

Logos Stick said:

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Aggie Spirit said:

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"Reading between the lines, that means rates could be headed up."

Or down.

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LOL

I don't think Trump will allow his boy to raise rates.

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A few things to keep in mind about Warsh:

1. The Fed Chair is usually the most influential person at the Fed but only has one vote on the FOMC which directly determines the Fed Funds rate and therefore strongly influences short term rates like SOFR and Prime, but does not directly determine long term rates.

2. Warsh is in the seat, so Trump's influence over him is questionable.

Ag_of_08 said:

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Always excuses...

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Transportation (shipping) is tied to fuel prices so everything that is shipped (i.e. damn near everything) will be dependent on the fluctuation in the price of oil. We saw that demonstrated under Biden's watch.

Aggie Spirit said:

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"Reading between the lines, that means rates could be headed up."

Or down.

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Not long term rates, which are set by the bond market and not the Fed. Step back and look at the big picture:

1. The US is running annual deficits of 6% to 7% annually.
2. This is increasing our national debt as a percentage of GDP. It's near levels not seen since WW2.
3. The 10 year Treasury note has responded and continues inching upward after a long period of decline since the 1970's. Bond holders are demanding a greater risk premium from the US government to lend it money.
4. Our annual interest bill has exploded to over $1 Trillion. This just reinforces the circular pattern of higher deficits, higher debt, and higher rates.

MemphisAg1 said:

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B-1 83 said:

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What was the price of oil? What is it now?

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This is core PCE. Gasoline has nothing to do with it. Oil is relevant only to the extent that it's used in products like plastics and clothes that have higher costs because of oil, which will be minimal.

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Except for shipping everything. So yes the core PCE is tied (indirectly) to oil prices.

BusterAg said:

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So, should we always be concerned just with core inflation, or should we never be concerned with core inflation. My head is spinning on which metric is correct here.

I would think that both core and "all-in" are useful.

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They're both meaningful. All-in gives the best sense for what consumers are feeling now in the moment since it includes volatile food and energy. Core gives a better indication of what's "really under the hood" after you exclude the volatile items.

Aggie Spirit said:

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"Reading between the lines, that means rates could be headed up."

Or down.

https://fred.stlouisfed.org/graph/?g=1WYLP



There's a reason the homebuilder stocks have rallied strongly over the last month.

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Or because the administration stopped aggressive ICE enforcement.

Another big driver of inflation is the AI craze.

The cost of everything electronic has gone vertical, assuming us lowly civilians can find them at all. RAM, SSDs, hard drives, graphic cards, etc. etc. etc. have skyrocketed in price because all of the AI companies are sucking them up, and don't care what the price is. They'll gladly pay $2000 for a 30TB hard drive if it means they get it quicker than a competitor.

When inflation numbers are bad under Biden, its always due to insane government spending. When inflation numbers are bad under Trump, it has nothing to do with insane government spending.

BusterAg said:

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This.

Stop.Printing.Money.

Stop.Spending.Money.

The End.

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Okay, done.

Now what? We no longer have ANY government services, there is no law enforcement, no services, no army.

And the economy has collapsed and inflation is now at 9000% and people are exchanging gold for medicine and bullets for bread.

Are we better off?

Because we devalued the dollar by collapsing our society.

I get your point, just meeting hyperbole with hyperbole.

Agree with your proposed reforms immigration and deportation and addressing FWA.

Agree with at best a balanced budget but ideally one that includes a debt repayment plan as part of the budget.

But it not only lacks will in Washington DC, it lacks the popular support required to change DC.

You don't change things in the federal government by yelling at the federal government.

flown-the-coop said:

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Because we devalued the dollar by collapsing our society.

I get your point, just meeting hyperbole with hyperbole.

Agree with your proposed reforms immigration and deportation and addressing FWA.

Agree with at best a balanced budget but ideally one that includes a debt repayment plan as part of the budget.

But it not only lacks will in Washington DC, it lacks the popular support required to change DC.

You don't change things in the federal government by yelling at the federal government.

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If Trump wanted a balanced budget we would have a balanced budget.

MemphisAg1 said:

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B-1 83 said:

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What was the price of oil? What is it now?

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This is core PCE. Gasoline has nothing to do with it. Oil is relevant only to the extent that it's used in products like plastics and clothes that have higher costs because of oil, which will be minimal.

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how is it that NASDAQ tanked over the course of three hours even after MICRON destroyed earnings last night

while the DOW continues to move up after these inflation numbers??

it makes no sense

Rapier108 said:

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Another big driver of inflation is the AI craze.

The cost of everything electronic has gone vertical, assuming us lowly civilians can find them at all. RAM, SSDs, hard drives, graphic cards, etc. etc. etc. have skyrocketed in price because all of the AI companies are sucking them up, and don't care what the price is. They'll gladly pay $2000 for a 30TB hard drive if it means they get it quicker than a competitor.

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How so?

LMCane said:

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MemphisAg1 said:

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B-1 83 said:

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What was the price of oil? What is it now?

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This is core PCE. Gasoline has nothing to do with it. Oil is relevant only to the extent that it's used in products like plastics and clothes that have higher costs because of oil, which will be minimal.

---

how is it that NASDAQ tanked over the course of three hours even after MICRON destroyed earnings last night

while the DOW continues to move up after these inflation numbers??

it makes no sense

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Lol, I did stay at a Holiday Inn Express last night, but I don't have a clue on short-term market movements.

The big picture trend is pretty clear though and is obvious in the key indicators I shared above from FRED.

flown-the-coop said:

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Because we devalued the dollar by collapsing our society.

I get your point, just meeting hyperbole with hyperbole.

Agree with your proposed reforms immigration and deportation and addressing FWA.

Agree with at best a balanced budget but ideally one that includes a debt repayment plan as part of the budget.

But it not only lacks will in Washington DC, it lacks the popular support required to change DC.

You don't change things in the federal government by yelling at the federal government.

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Yep.

And as long as the masses are too busy fighting each other or just placated with the status quo, nothing will ever change in the way it needs to.

Investing based simply on one economic indicator with no additional context or consideration of economic indicators is not a wise investment strategy. See the B&I board for more information on markets and investments.

None of it makes sense anymore.

The average American is complaining about depressed wages, and no ability to keep up with inflation. Yet we see reports of consumer demand high enough to drive further inflation?

I understand why the Covid giveaways created substantial consumer demand and high inflation based on the thousands and thousands of extra dollars suddenly in the pockets of lower and middle class Americans, but that money was spent over four years ago.

Our government has spent wildly for many decades. Yet during the majority of that time, inflation was "in check" why is it different at this point in time?

I am not disagreeing with the notion that we are spending way too much money and that our government budget is obscenely bloated . However, the supply and demand aspect of inflation seems to be out of whack right now.

Aggie95 said:

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None of it makes sense anymore.

The average American is complaining about depressed wages, and no ability to keep up with inflation. Yet we see reports of consumer demand high enough to drive further inflation?

I understand why the Covid giveaways created substantial consumer demand and high inflation based on the thousands and thousands of extra dollars suddenly in the pockets of lower and middle class Americans, but that money was spent over four years ago.

Our government has spent wildly for many decades. Yet during the majority of that time, inflation was "in check" why is it different at this point in time?

I am not disagreeing with the notion that we are spending way too much money and that our government budget is obscenely bloated . However, the supply and demand aspect of inflation seems to be out of whack right now.

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Consumers have new ways to buy things in payments that don't require credit cards now.

That's helping keep the economy from having its much overdue collapse.

Take away all forms of credit, for the rich and poor alike, and then we'll see just how strong our economy actually is.

Aggie95 said:

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None of it makes sense anymore.

The average American is complaining about depressed wages, and no ability to keep up with inflation. Yet we see reports of consumer demand high enough to drive further inflation?

I understand why the Covid giveaways created substantial consumer demand and high inflation based on the thousands and thousands of extra dollars suddenly in the pockets of lower and middle class Americans, but that money was spent over four years ago.

Our government has spent wildly for many decades. Yet during the majority of that time, inflation was "in check" why is it different at this point in time?

I am not disagreeing with the notion that we are spending way too much money and that our government budget is obscenely bloated . However, the supply and demand aspect of inflation seems to be out of whack right now.

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You are right, the bolded part does not make sense.

Maybe the misinformation is on the "average American is complaining about" side of things…