News & analysis
August PCE price index rises 0.3% as prior month is revised to 0.1%
Core prices rose 0.2% on the month and 3.0% over the year, while consumer spending climbed 0.9% and the saving rate held at 4.1%.
Key points
- The August PCE price index rose 0.3% month over month, in line with the forecast, with the prior month's gain revised down to 0.1% from 0.2%.
- Core PCE prices rose 0.2% in August; over 12 months the headline index was up 3.4% and core prices up 3.0%.
- Current-dollar consumer spending rose $190.8 billion, or 0.9%, in August as personal income increased 0.2% and the saving rate stood at 4.1%.
The personal consumption expenditures price index rose 0.3% in August from a month earlier, matching the forecast, while July's increase was revised down to 0.1% from 0.2%, the Bureau of Economic Analysis said in its August personal income and outlays release. Core prices, which exclude food and energy, rose 0.2% on the month.
Over 12 months, the PCE price index was up 3.4% in August and core prices were up 3.0%, the BEA said. The monthly figures landed where economists expected, but the downward revision to July lowered the starting point for the inflation path into the second half of the year.
Households increased spending faster than their incomes. Current-dollar personal consumption expenditures rose $190.8 billion, or 0.9%, split between a $114.1 billion increase in goods outlays and $76.7 billion in services. Real PCE, which strips out price changes, rose $92.8 billion, or 0.6%. Personal income rose $66.6 billion, or 0.2%, and disposable personal income rose $68.6 billion, or 0.3%, with the gains driven mainly by compensation and government social benefits. Personal saving was $990.2 billion, a saving rate of 4.1% of disposable income.
The August figures are the first to reflect the annual update of the National Economic Accounts, which revises personal income and outlays estimates from January 2021 onward and therefore shifts comparisons with earlier periods. Compensation for January through March 2026 incorporates first-quarter wage and salary data from the BLS Quarterly Census of Employment and Wages, while April-to-July wage and salary estimates were updated with revised monthly figures from the BLS CES program. The Medicaid component of government social benefits was revised using updated Centers for Medicare & Medicaid Services information.
