US Pulse Weak Consumption Constrains Inflation Passthrough

Weak consumer consumption in the US is effectively constraining inflation passthrough, providing evidence that the economy is not in a high-inflation regime. Labour market conditions are stabilising, and wage growth is trending toward the 2% target.

Key Takeaways

• 1.Weak consumer activity in 2026 is limiting inflation passthrough, evidenced by moderated core market-based PCE inflation.
• 2.The labour market shows signs of stabilisation, with wage growth trending lower towards levels consistent with the 2% inflation target.
• 3.Fed officials reiterate commitment to inflation targets, though there is cautious optimism that inflation may be peaking.

Table of Contents

• Data ahead of FOMC
• The week ahead
• The week that was
• US Pulse: weak consumption constrains inflation passthrough
• Some encouraging signs amid high annual PCE inflation
• Data pulse: the week ahead
• Data pulse: the week that was

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