Apr 2024 PCE Estimate
After coming higher-than-expected for 3 months in a row from Jan - Mar this year, Apr CPI came mostly in line with expectations which was a welcome surprise that lifted the market optimism.
Apr PPI was more mixed. Although both headline and core PPI came in at +0.5% vs +0.3% and +0.2% expected respectively, both came in line for YoY due to substantial downward revisions to Mar. Both headline and core PPI in Mar were revised from +0.2% to negative -0.1% MoM.
Unlike CPI and PPI which missed in some or all of the first 3 months this year, PCE didn’t have MoM misses. Mar PCE came in line with expectations for MoM read although YoY figures were +0.1 pp higher than expected for headline and +0.2 pp higher than expected for core.
PCE mostly came tamer than CPI and PPI suggested, or better say not as hot as feared.
Now the question is can PCE once again come cooler than CPI?
My Apr PCE estimates are….
+0.3% MoM and +2.7% YoY for headline and +0.2% MoM and +2.7% YoY for core. My unrounded estimates are:
If my estimates are correct, we would have the lowest headline and core PCE MoM this year, core PCE YoY would continue to go down for the 15th month in a row, while headline PCE YoY would go down for the first time in 3 months.
That alone is unlikely to make the Fed to cut rates immediately but it would be a step in the right direction.
Looking forward, the focus is on May CPI and Jun Fed meeting next month. Given that May CPI comes out on the 2nd day of the Fed meeting, it will carry even more importance than usual.
To get an early insight into May CPI read, you can read Marko’s CPI Report which contains:
forward looking inflation indicators
detailed Apr CPI estimate
forward trajectory for headline and core CPI this year
a surprising fact that could change your view on the Fed and inflation
To get Marko’s CPI Report, make sure to subscribe to Arkomina Research Pro Investor.
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