Fed's favored inflation gauge cooled in August but remained elevated
Commerce Department releases closely watched August 2026 PCE inflation data
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This story about the August 2026 PCE inflation report will be updated with further details.
The Federal Reserve's preferred inflation gauge cooled more than expected but remained elevated well above target in August as consumers continued to face price pressures.
The Commerce Department on Wednesday reported that the personal consumption expenditures (PCE) index rose 0.3% on a monthly basis in August and was up 3.4% from a year ago. Both figures were cooler than the expectations of economists polled by LSEG, who predicted 0.4% and 3.7%, respectively.
Core PCE, which excludes volatile measurements of food and energy prices, was up 0.2% on a monthly basis and 3% year over year. Both figures were cooler than economists' expectations of 0.3% and 3.3%, respectively.
WHY THE FED ISN'T READY TO DECLARE VICTORY ON INFLATION
Federal Reserve policymakers are focused on the PCE headline figure as they try to bring inflation back to their long-run target of 2%, though they view core data as a better indicator of inflation.
Compared with July's readings, headline PCE declined from 3.7% to 3.4%, while core PCE also fell from 3.3% to 3%.