The Federal Reserve’s favorite inflation thermometer is about to get recalibrated. The Bureau of Economic Analysis is rolling out methodological changes to several components of the Personal Consumption Expenditures Price Index, with the updated figures set to land on September 30, 2026, as part of the agency’s annual GDP revision cycle.
The headline effect: economists at Goldman Sachs and JPMorgan both project that the core PCE reading for May 2026, initially reported at 3.4% year-over-year, could be revised down to somewhere between 3.2% and 3.3%. That is a seemingly small move, but in the context of a Fed still trying to close the last mile to its 2% inflation target, a couple of ticks is not nothing.
What is actually changing, and why
The BEA is targeting three specific areas: portfolio management and investment advice services, legal services, and computer software and accessories.
The problem with the current methodology is, broadly, that it leans on data sources that do not always reflect actual price changes cleanly. For software, the PCE has been using composite indices that blend together very different kinds of products. For portfolio management services, the index has been extrapolating prices based on employment figures, which is a bit like estimating the price of a meal by counting how many chefs are in the kitchen.
