US Headline PCE Inflation Expected to Pick Up

The US PCE price index rose 0.3% month-over-month in August 2026, following a downwardly revised 0.1% gain in July and slightly below market expectations of 0.4%. Goods prices increased 0.3%, rebounding from a 0.1% decline in July, led by a 0.5% rise in nondurable goods, mainly due to a 4.4% jump in gasoline and other energy goods prices. Durable goods inflation, meanwhile, eased to 0.1% from 0.4%. Services prices also accelerated to 0.3% from 0.1%, driven mainly by higher transportation services (1.4%) and food services and accommodations (0.5%). The core PCE price index, excluding food and energy, rose 0.2%, also below forecasts of 0.3%. Year-on-year, headline PCE inflation held at 3.4%, unchanged from a downwardly revised July reading, while core inflation remained at 3.0%. The PCE price index is the Fed’s preferred inflation gauge and has remained above its 2% target since 2021.

The US PCE price index is expected to increase 0.4% month-over-month in August 2026, marking the biggest gain in three months, following a 0.2% rise in July. The core PCE price index, which excludes food and energy, is projected to rise 0.3%, also the most in three months after a 0.2% rise. On an annual basis however, headline PCE inflation is expected to remain at 3.7% for a third consecutive month and the core rate is also seen steady at 3.3%, the same as in each of the previous two months. The personal consumption expenditures price index is the primary inflation gauge for the Fed and has been above the 2% target since 2021.

The US PCE price index rose 0.2% month-over-month in July 2026, above market expectations of a 0.1% increase, following a 0.1% decline in June. Services inflation accelerated to 0.3% from 0.1% in the previous month, while goods prices fell 0.1% (vs -0.6%). Core PCE inflation, which excludes food and energy, increased 0.2%, as expected, following a 0.1% increase in June. On an annual basis, headline PCE inflation remained unchanged at 3.7%, above expectations of 3.6%, while core PCE inflation also held steady at 3.3%, matching expectations.