First Insights: US: June CPI data point to deceleration in core PCE inflation

Research evidence excerpt

First Insights: US: June CPI data point to deceleration in core PCE inflation

Global Markets Research

14 July 2026First Insights

Economics - North America

Research AnalystsUS: June CPI data point to deceleration in core

North America EconomicsPCE inflation

Aichi Amemiya - NSI

• Core CPI inflation surprised to the downside, falling by 0.017% m-o-m in June aichi.amemiya@nomura.com

(Nomura: 0.215%, Consensus: 0.2%) from +0.208% in May, the first monthly decline +1 212 667 9347

since May 2020. Jeremy Schwartz - NSI

jeremy.schwartz@nomura.com

• Based on CPI data, we have lowered our core PCE inflation forecast for June by 10bp +1 212 667 9637

to 0.168% m-o-m from our pre-CPIestimate of 0.271%. This would be consistent with

Ruchir Sharma - NSI an annual rate of 2%.

ruchir.sharma@nomura.com

• Some of the weakness in core CPI (e.g. motor vehicle insurance and medical care +1 212 667 9186

services) does not feed into core PCE inflation calculations. In addition, some

components that have a higher weight in PCE than CPI (e.g., computer software and

accessories, sports equipment etc.) rebounded in the month. Furthermore, we expect

a modest positive contribution from PCE-relevant PPI data, which are scheduled for

release tomorrow.

• Although the softening in June appears to have been amplified by some one-off

factors, moderating wage growth, residual seasonality, PCEannualrevisions, and the

waning impact from tariffs suggest that core PCE inflation will likely decelerate

gradually in the second half of this year. This supports our Fed call of no rate hikes

indefinitely.

Downside surprise in core CPI lowers our forecast for June core PCE inflation

Core CPI inflation surprised to the downside, declining by 0.017% m-o-m in June, the first

monthly fall since May 2020.