Business & Markets
August PCE inflation held at 3.4% after annual revisions as spending accelerated
Headline and core PCE prices rose 0.3% and 0.2% in August. Real consumer spending increased 0.6%, while inflation-adjusted disposable income was unchanged. The BEA released the figures alongside its annual update to national accounts.
Executive summary
- Prices: The BEA's PCE price index rose 0.3% in August and 3.4% from a year earlier. Core PCE rose 0.2% for the month and 3.0% year over year.[1][2]
- Spending and income: Consumer spending increased 0.9% in current dollars and 0.6% after inflation. Real disposable income was unchanged; the personal saving rate was 4.1%.[1][2]
- Revision caveat: The BEA released the data with its annual national-accounts update. AP reported that the update revised July's previously reported year-over-year inflation rate from 3.7% to 3.4%, so the August annual figure should not be described as a clear year-over-year slowdown from July.[1][2]
The Personal Consumption Expenditures price index rose 0.3% from July to August and stood 3.4% above its level a year earlier, the Bureau of Economic Analysis said Wednesday. The core index, which excludes food and energy, rose 0.2% for the month and 3.0% over 12 months.[1][2]
At the same time, personal consumption expenditures increased $190.8 billion, or 0.9%, in current dollars. After adjusting for prices, real PCE rose 0.6%. Personal income increased 0.2%, while real disposable personal income was unchanged. The saving rate was 4.1%.[1]
The figures show households continued to spend as prices rose, but nominal spending growth exceeded the increase in real spending. The PCE measure is closely watched by the Federal Reserve, while the BEA cautioned that this release also incorporates its annual update to national economic accounts.[1][2]
The August release is not a simple comparison against the inflation figures originally reported for July. AP reported that the annual update revised July's year-over-year PCE inflation rate from 3.7% to 3.4%. August's 3.4% annual rate therefore matched the revised July rate, rather than falling from it.[2][1]
That distinction matters because the news release combines a new month of data with revised historical estimates. The BEA says the annual update revises national economic accounts data beginning in January 2021. Readers should use the updated series when comparing months, not mix the August figure with July's unrevised headline.[1]
The monthly price indexes still rose in August: headline PCE was up 0.3% and core PCE 0.2%. AP said those results came in below the forecasts it cited from economists, but the annual rate's movement from July is affected by the revision.[1][2]
The report offers one month's snapshot of consumer inflation, income and spending; it does not establish whether the pace will persist. The gap between current-dollar and inflation-adjusted spending also shows that part of the larger nominal outlay reflects higher prices rather than additional purchasing volume.[1]
The combination of faster real spending and flat real disposable income is a useful signal for demand, but it does not by itself identify how households financed purchases or which income groups drove the increase. The revised historical series, future price data and labor-market figures will shape the broader outlook.[1][2]