PCE Inflation August 2026 Cools but Stays Above Target

PCE inflation cooled in August 2026, but the U.S. Bureau of Economic Analysis’s September 30 release showed inflation remained above the Federal Reserve’s target. The report included the BEA’s 2026 annual update to the National Economic Accounts, which revises data back to January 2021 and complicates historical comparisons for traders and investors.

August Inflation and Annual Revisions

The BEA reported that the personal consumption expenditures (PCE) price index rose 0.3% month over month in August and 3.4% year over year. The core PCE price index, which excludes food and energy, increased 0.2% monthly and 3.0% annually. The agency published the report at 8:30 a.m. ET on September 30.

This release incorporated the BEA’s 2026 annual update, which revises economic data from the first quarter of 2021 through the first quarter of 2026. These revisions require careful interpretation of year-over-year inflation and short-term trends against the revised baseline.

Federal Reserve Governor Michael Barr said in a September 29 speech that inflation had remained above the Federal Open Market Committee’s 2% objective for five and a half years. He added he did not see “a clear trend toward a timely return to 2 percent,” signaling continued caution among policymakers.

Consumer Income, Spending, and Saving

Personal income rose $66.6 billion, or 0.2% monthly, while disposable personal income increased $68.6 billion, or 0.3%. Nominal personal consumption expenditures climbed $190.8 billion, or 0.9%, driven by a $114.1 billion increase in goods spending and a $76.7 billion rise in services. Real personal consumption expenditures grew $92.8 billion, or 0.6%.

Household saving totaled $990.2 billion, with the personal saving rate at 4.1% of disposable income.

“I don’t yet see a clear trend toward a timely return to 2 percent,” Barr said, emphasizing the persistence of inflation above the Fed’s target.