Underlying inflation pressures accelerate as trimmed mean PCE climbs, driven by housing and AI-related component costs.
The Dallas Fed’s trimmed mean PCE price index increased 2.8% year-over-year, up from 2.4% in the prior period, signaling rising underlying inflation. The gain reflects broad price pressures, including housing costs and semiconductor-driven consumer product hikes, such as Apple’s recent price increases tied to AI-related chip demand.
While 26% of the index’s components showed deflation, 24% ran above a 5% annualized pace. Housing remained a key driver, with most components up 3-5% despite a sluggish real estate market. Oil prices, tariffs, and a strong stock market also contributed to the uptick.
The data underscores persistent inflation risks, particularly if housing demand rebounds or supply chain bottlenecks in AI-related components worsen.