Woofun AI reports that the Bureau of Economic Analysis announced methodological adjustments to three components of the PCE price index, effective September 30, 2026, with retrospective revisions to historical data. Goldman Sachs and UBS contend these changes are engineered to systematically lower core PCE inflation readings while introducing significant risks of data manipulation due to a lack of transparency.

The first adjustment targets software and accessories, replacing the exclusive reliance on CPI prices with a composite index blending the PPI for data processing services, the PPI for video game software, and the existing CPI. Goldman Sachs projects this shift will reduce core PCE inflation by 0.05 to 0.1 percentage points in May and by 0.1 to 0.2 percentage points in December. This structural change alters the weighting of digital goods within the broader consumption basket.

Portfolio management services face a second overhaul where nominal expenditures will no longer be adjusted directly via the PPI. Instead, the new protocol measures actual service volume using total hours worked from employment surveys to derive corresponding prices. Analysts estimate this substitution will lower core PCE inflation by 0.1 to 0.15 percentage points in May and by 0.1 to 0.2 percentage points in December. UBS warns that relying on labor data rather than direct price indices may compromise accuracy and heighten the likelihood of future revisions.

Legal services represent the third component, shifting from CPI figures to a composite index built from the PPI for specific legal services. Goldman Sachs forecasts a marginal increase of approximately 0.04 percentage points in May for core PCE inflation due to this specific change. This slight upward pressure stems from sample quality issues that prevented the release of CPI data for legal services for most of 2023.

Aggregating these three modifications, Goldman Sachs expects core PCE inflation to be revised downward by 0.2 percentage points to 3.2% in May. The bank has subsequently lowered its December 2026 forecast from 3.2% to 3.0% while maintaining its December 2027 projection at 2.2%.

Woofun AI data shows UBS estimates that adopting the new methodology would have reduced overall PCE inflation over the past 12 months by approximately 0.21 percentage points and core PCE inflation by approximately 0.23 percentage points.

UBS argues these revisions deliberately diminish the prominence of inflationary trends at the higher end of the distribution. Both institutions caution that the reduced transparency will hinder external verification of official data, thereby increasing uncertainty around Federal Reserve monetary policy decisions. This marks a contentious shift in how official economic indicators are constructed and interpreted.