Fed's Preferred Inflation Gauge Remains Above Target Range

By Jessica Coacci

The Fed's preferred gauge of monthly price increases grew last month and remains above the central bank's preferred target range.

The personal-consumption expenditures price index rose by 0.2% in July, from a decrease of 0.1% in June, the Commerce Department said. Excluding the volatile good and energy categories, core PCE rose by 0.2%.

Over the past year, the PCE index is up by 3.7%. The core 12-month PCE inflation rate is up 3.3%.

Wednesday's PCE report precedes Chairman Kevin Warsh's debut speech at the Fed's annual gathering in Jackson Hole, Wyo. Growing impatience among Fed officials to return inflation to target and volatile swings in bond yields have increased market participants' appetite for more clarity.

The PCE reading is often close to expectations because economists can use components from the consumer and producer price indexes published earlier in the month to forecast the reading with great accuracy. July's consumer price index report was down slightly from its June reading, lifting some immediate pressure off the central bank to increase at its September interest-rate meeting.

Some economists warned certain components of PPI could add pressure to the core reading of PCE last month as portfolio management services climbed higher. Upcoming methodological changes to those components at the BEA are likely to ease pressure on core PCE when the revised approach is rolled out next month.

The Commerce Department's report also showed that consumer spending rose by 0.2% on month. That was higher than what economists polled by The Wall Street Journal expected.

Personal income increased by 0.4% on month, higher than forecasts.

Write to Jessica Coacci at jessica.coacci@wsj.com

(END) Dow Jones Newswires

August 26, 2026 08:44 ET (12:44 GMT)