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BEA PCE methodology tweaks seen as lowering projected core inflation
TD Securities estimates May 2026 core PCE inflation would be about 15 basis points lower after the revision, with the broader effect on monthly core inflation averaging around minus 1 basis point over the past year.
TD Securities economists Eli Nir and Oscar Munoz said upcoming BEA changes to the methodology for the US Personal Consumption Expenditures, or PCE, Price Index are likely to have limited impact on inflation readings and Federal Reserve policy.
They expect that, under the revised approach, May 2026 core PCE year on year inflation would have been about 15 basis points lower than the currently reported 3.4%, and that the average monthly impact on core PCE over the past year would have been about minus 1 basis point.
The economists also noted that the revisions will be released on September 30 alongside the August data, when the BEA will publish additional methodology details that are not yet available, meaning any early impact estimates depend on assumptions.
TD Securities said the affected categories account for just 3.67% of the PCE basket, with implications for Fed policy viewed as minimal, and that revisions should better match measured inflation with underlying spending patterns, including for portfolio management services, legal services, and computer software and accessories.