BEA‘s annual revision: Taking some air out of core PCE price inflation

Research evidence excerpt

BEA‘s annual revision: Taking some air out of core PCE price inflation

FICC Research

Economics

30 June 2026

US Economics

BEA's annual revision: Taking

some air out of core PCE price

Pooja Sriraminflation

+1 212 526 0713

pooja.sriram@barclays.comBEA’s annual revision could lower core PCE inflation this

year, trimming Q1 momentum by 0.4-0.5pp on a 3m saar BCI, US

basis, and May y/y by 0.2pp. We view this mainly as a Marc+1 212Giannoni526 9373

measurement refinement that is unlikely to materially change marc.giannoni@barclays.com

BCI, US

the narrative on underlying inflation.

Jonathan Millar

+1 212 526 4876

The BEA's upcoming annual revision on September 30, 2026, features methodological jonathan.millar@barclays.com

changes to three subcomponents of PCE price inflation: legal services, portfolio BCI, US

management, and computer software and accessories. Each appears to be aimed at limiting Colin Johanson

monthly volatility and improving the accuracy of components being measured. The revisions +1 212 526 8536

are to be applied to data from Q1 21 through Q1 26, and presumably to data for the subsequent colin.johanson@barclays.com

months available at the time of the update. BCI, US

The new software deflator could materially lower this category's contribution to Q1 core

PCE inflation, although the direction may not always be lower. BEA’s new composite

deflator, which will now include elements of PPI gaming software and hosting services, should

reduce the chip-price-driven spike in this category — potentially cutting inflation in this

category by about half in Q1 2026 — though May’s proxy points to a stronger reading than what

was registered by the existing PCE deflator.

Portfolio management deflator revamp may not be a clean fix for volatility: The BEA plans