U.S. BEA to Revise PCE Inflation Calculation Method Starting September 30, May Lower Core PCE by 0.2 Percentage Points

According to the U.S. Bureau of Economic Analysis (BEA), on July 19, the bureau announced it will revise the methodology for calculating the Personal Consumption Expenditures (PCE) price index, a key inflation gauge used by the Federal Reserve, effective September 30, 2026. The changes will affect three sectors: computer software and related services, legal services, and portfolio management and investment advisory services. The BEA stated the new approach will more accurately reflect the composition of goods and services in these categories. Economists estimate the methodology shift could lower core PCE inflation by approximately 0.2 percentage points compared to existing calculations, with software pricing changes potentially contributing about 0.1 percentage point of the reduction and investment management service changes potentially adding 0.2 percentage points.
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