Key inflation indicator rose about as expected in August

The Federal Reserve’s preferred metric to gauge inflation increased by 0.3% in August, compared to 0.2% in the previous month, the U.S. Bureau of Economic Analysis (BEA) reported Friday morning.

The Personal Consumption Expenditures (PCE) Price Index, which measures the value of goods and services, increased 2.7% annually last month, according to the BEA. Meanwhile, core PCE, which excludes food and energy items, rose by 2.9% in August, the BEA reported.

The PCE price index was projected to be 2.7% over the 12 months ending in August, while core PCE was expected to rise by 2.9%, the Federal Reserve Bank of Dallas reported on Tuesday. In July, the PCE price index saw a year-over-year increase of 2.6%, while core inflation rose 2.9%, the BEA reported on August 29.

The release of Friday’s PCE report comes after U.S. real gross domestic product (GDP) grew stronger than anticipated in the second quarter of 2025. The nation’s GDP increased at an annual rate of 3.8% in the second quarter, the BEA reported on Thursday.

Moreover, wholesale inflation declined unexpectedly in August, with the producer price index decreasing by 0.1%, the Bureau of Labor Statistics (BLS) reported on Sept. 10. Meanwhile, job growth slowed last month, with the U.S. economy adding just 22,000 nonfarm payroll jobs, according to BLS data released Sept. 5.

The Fed announced on Sept. 17 it was lowering interest rates by a quarter of a percentage point, which notably marked the first rate cut of this year.

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