Core PCE Preview: Forecasts from five major banks, prices to have gone up moderately

The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure (Core PCE), will be published on Friday, December 23 at 13:30 GMT and as we get closer to the release time, here are the forecasts of economists and researchers of five major banks.

The market expectation is for the monthly core PCE inflation to rise by 0.4% in November following October’s 0.2% increase. On a yearly basis, consensus sees 4.6% vs. 5.0% in October. If so, it would be the second straight deceleration to the lowest since October 2021. 

TDS

“Core PCE prices likely rose at a 0.2% MoM pace for a second consecutive month in Nov (also matching the core CPI data). The YoY rate likely fell to 4.6% from 5.0% in Oct, suggesting prices continue to moderate but remain sticky at elevated levels. Separately, personal spending is expected to rise a firm 0.3% MoM after the solid 0.7% MoM pace registered, on avg, over Aug-Oct.”

Deutsche Bank

“We think it should come in at 0.2% MoM, taking the YoY rate down three-tenths to 4.7%. Normally core PCE is above core CPI but over the next 12 months our economists think that anomalies in healthcare components between the two means that the former will edge above the latter at 3.2% for 2023 Q4/Q4 against 3.1%.”

NBF

“Still in November, Core PCE deflator may have moved down from 5.0% to 4.7%.”

CIBC

“The Fed’s preferred measure of prices, core PCE prices, could have risen more modestly on a monthly basis than its CPI counterpart, given the lower weighting of shelter in the index, leaving the annual pace at 4.6%. We are roughly in line with the consensus, which should limit any market reaction.”

Wells Fargo

“We expect a 0.2% monthly rise in the headline index and a 0.3% increase in the core index.”