Core inflation rose to 2.9% in July, as expected, key Fed measure shows
Source: CNBC
Published Fri, Aug 29 20258:31 AM EDT Updated 4 Min Ago
Inflation edged higher in July, according to the Federal Reserve’s preferred inflation measure, indicating that President Donald Trump’s tariffs are working their way through the U.S. economy.
The personal consumption expenditures price index showed that core inflation, which excludes food and energy costs, ran at a 2.9% seasonally adjusted annual rate, according to a Commerce Department report Friday. That was up 0.1 percentage point from the June level but in line with the Dow Jones consensus forecast.
On a monthly basis, the core PCE index increased 0.3%, also in line with expectations. The all-items index showed the annual rate at 2.6% and the monthly gain at 0.2%, also hitting the consensus outlook.
The Fed uses the PCE price index as its primary forecasting tool. Though it watches both numbers, policymakers consider core inflation to be a better indicator of longer-term trends as it excludes the volatile gas and groceries figures. Central bankers target inflation at 2%, so Friday’s report shows the economy still a distance from where the Fed feels comfortable.
Read more: https://www.cnbc.com/2025/08/29/pce-inflation-report-july-2025.html
From the source - https://www.bea.gov/news/2025/personal-income-and-outlays-july-2025
Article updated.
Previous articles/headline -
Published Fri, Aug 29 20258:31 AM EDT Updated 2 Min Ago
Inflation edged higher in July, according to the Federal Reserve's preferred inflation measure, indicating that President Donald Trump's tariffs are weaning their way through the U.S. economy.
The personal consumption expenditures price index showed that core inflation, which excludes food and energy costs, ran at a 2.9% seasonally adjusted annual rate, according to a Commerce Department report Friday. That was up 0.1 percentage point from the June level but in line with the Dow Jones consensus forecast.
On a monthly basis, the core PCE index increased 0.3%, also in line with expectations. The all-items index showed the annual rate at 2.6% and the monthly gain at 0.2%, also hitting the consensus outlook.
The Fed uses the PCE price index as its primary forecasting tool. Though it watches both numbers, policymakers consider core inflation to be a better indicator of longer-term trends as it excludes the volatile gas and groceries figures. Central bankers target inflation at 2%, so Friday's report shows the economy still a distance from where the Fed feels comfortable.
Inflation edged higher in July, according to the Federal Reserve's preferred inflation measure, indicating that President Donald Trump's tariffs are weaning their way through the U.S. economy.
The personal consumption expenditures price index showed that core inflation, which excludes food and energy costs, ran at a 2.9% seasonally adjusted annual rate, according to a Commerce Department report Friday. That was up 0.1 percentage point from the June level but in line with the Dow Jones consensus forecast.
On a monthly basis, the core PCE index increased 0.3%, also in line with expectations. The all-items index showed the annual rate at 2.6% and the monthly gain at 0.2%, also hitting the consensus outlook.
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Original article -
The personal consumption expenditures price index was expected to show core inflation at 2.9% and headline inflation at 2.6%.
This is breaking news. Please refresh for updates.
= new reply since forum marked as read
Just for a quick look at the graphs. I'm still working on the blah blah part
I'm not a big fan of the PCE, because it is a chained price index. It all boils down to is that it includes the effects of consumers switching to lower grade items, so, for example if in the face of high beef prices, consumers switch to chicken and beans, that lowers the reported meat and food PCE inflation numbers. (The reverse also happens too)
For that reason, I prefer the CPI, which has less of that.
But the PCE, especially the Core PCE, is what the Fed favors, so anyone trying to predict what the Fed might do needs to focus on the Core PCE, and not the CPI measures
The Fed favors the CORE measures for forecasting FUTURE inflation, as shown by analysis of the data.
I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.
ALL the numbers are the seasonally adjusted ones
In below, "REG" is the regular PCE (all items).
While "CORE" is the Core PCE (all items less food and less energy)
REG CORE
--- ----
2.4% 3.3% June to July change, annualized
2.6% 3.0% 3 month average, annualized
2.6% 2.9% 12 month average, aka year-over-year
Fed target is 2.0%
REGULAR ALL ITEMS PCE
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"
https://www.bea.gov/news/2025/personal-income-and-outlays-july-2025
https://fred.stlouisfed.org/series/PCEPI
CORE PCE:
https://fred.stlouisfed.org/series/PCEPILFE
=====================================================
For comparison purposes, here are the CPI graphs
REGULAR ALL ITEMS CPI (released 8/12/25)
https://www.bls.gov/news.release/cpi.nr0.htm
https://data.bls.gov/timeseries/CUSR0000SA0
CORE CPI (released 8/12/25):
http://data.bls.gov/timeseries/CUSR0000SA0L1E
LBN thread on CPI inflation, 8/12/25:
https://www.democraticunderground.com/10143511498
