The U.S. core Personal Consumption Expenditure (PCE) price index increased 0.2% on the month in August, matching the median forecast and matching July’s upwardly revised 0.1% gain. The annual rate rose to 2.8% from 2.7% in July, according to preliminary figures released on Wednesday.
The Federal Reserve tracks the core PCE as its primary inflation barometer, and the latest reading suggests price pressures remain broadly aligned with policymakers’ expectations. The index excludes volatile food and energy components, providing a clearer view of underlying inflation trends.
The U.S. dollar extended gains against major peers following the release, with the DXY index up 0.15% at 101.45. Treasury yields were little changed, with the 10-year note holding around 4.25%. Market pricing for the Fed’s next policy decision in September implied a 60% probability of a rate cut, down from 65% before the data.
Economists noted the steady trend in core PCE could reinforce the Fed’s cautious approach to easing policy, as inflation remains above the central bank’s 2% target. The August report also showed the headline PCE index rose 0.2% month-over-month, while the annual rate edged up to 2.9% from 2.8% in July.
The data follows a string of mixed signals on U.S. inflation, with producer prices and consumer prices showing divergent trends in recent weeks. The Fed’s preferred measure has now increased by 0.2% in five of the past six months, underscoring a gradual but consistent disinflationary path.
