Fed's Preferred Inflation Gauge Shows Lower Than Expected Core PCE Inflation of 3% in August
The Federal Reserve’s primary inflation gauge, the personal consumption expenditures (PCE) price index, showed a slower-than-expected annual increase for both headline and core measures. The overall PCE rose by 0.3% month-over-month with an annual gain of 3.4%, below forecasts of 3.7%. Core PCE — which excludes food and energy — increased 0.2% monthly, resulting in a year-on-year rise of 3%, lower than the expected 3.3%. The Fed typically focuses on headline inflation but often uses core data to assess long-term trends. The report also noted that the Bureau of Economic Analysis revised its methodology for calculating several components of the index. While these changes may have influenced the results, their exact impact remains unclear at this time.
