From the Seoul Economic Daily:
The overhaul is expected to partly resolve an unusual gap between PCE and the more widely known Consumer Price Index (CPI). The annual core CPI rate in June was 2.6%, while core PCE was estimated at 3.3%. Typically CPI runs slightly above PCE, but recently the two reversed because of software and investment advisory figures. Both items are expected to show smaller increases after the overhaul.
Why the change? Well, “chipflation” was bleeding into software.
The SED continues:
For the software price measurement being revised, the BEA uses the BLS computing cost index. But that figure includes items such as USB flash drives. Their prices have surged amid a spike in demand for artificial intelligence (AI). The result was a distortion in which rising hardware prices were reflected in the software index.
For some reason game consoles are included in the software measurement. As I argued on July 14, these numbers are fraudulent. And this story is pretty solid evidence of that reality.
Carborundum
I don’t think the article is as clear as it might be. Here’s a Fed Note on the topic, which is a lot clearer: https://www.federalreserve.gov/econres/notes/feds-notes/measurement-of-computer-software-and-accessories-inflation-20260522.html
As a technical note, I don’t think it’s video game consoles – the article mentions video game *software* which makes a lot more sense.
spud
neo-liberal, neo-classical economics, “lets pretend that its real, then we build on it from there”
Nat Wilson Turner
How many layers of fix can be put in?