Core PCE price index forecast for early 2023

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It takes time to lower y/y inflation because it requires discarding previous “high” months

To reduce Core PCE inflation for the year, it is necessary to “discard” the higher months.

Recall that Core PCE inflation is a price level index, which means that it depends on cumulative price changes over 12 months.

Therefore, it takes time for y/y to decline. And as shown in the picture, over the next few months the “big” monthly gains will decline. But in January Core PCE inflation may have something with a number “3” in front of it (inflation <4%).


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