The US PCE price index is expected to rise 0.5% month-over-month in May 2026, accelerating from a 0.4% increase in April, as higher energy costs linked to the conflict with Iran continue to put upward pressure on prices. The core PCE index, which excludes food and energy, is projected to increase 0.3%, up from 0.2% in the previous month. On an annual basis, headline PCE inflation is forecast to accelerate for a third consecutive month to 4.1%, the highest reading since April 2023, compared with 3.8% in April. Core PCE inflation is also expected to edge higher to 3.4% from 3.3%, marking its strongest pace since late 2023. Overall, the report is likely to reinforce the view that inflationary pressures remain elevated in the US economy. Reflecting these concerns, the Federal Reserve raised its inflation projections at its June 2026 meeting, forecasting PCE inflation at 3.6% and core PCE inflation at 3.3% for the year, both remaining well above the Fed’s 2% target.

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