US July PCE 3.7% (August 26, 2026) — core at 3.3%, unchanged for a second month
The US Commerce Department reported on August 26, 2026 that the July personal consumption expenditures price index rose 3.7 percent from a year earlier and 0.2 percent from June. Core PCE, excluding food and energy, rose 3.3 percent year over year and 0.2 percent on the month — the same annual rate as June. Personal income rose 0.4 percent while real spending was flat. The reading carries weight for two reasons: PCE is the Federal Reserve's preferred inflation measure, and it arrived a day before the Jackson Hole symposium opened, with Chair Kevin Warsh's first keynote set for August 28
The three lines
- Numbers — Headline PCE +3.7% YoY, +0.2% MoM. Core +3.3% YoY, +0.2% MoM — the same as June
- Character — Neither improving nor deteriorating. The distance to the 2% target has not closed in two months
- Calendar — Jackson Hole runs August 27–29; Warsh's keynote is August 28, around 10 a.m. Eastern
Key questions
- How much did US PCE inflation rise in July 2026?
- **3.7 percent from a year earlier**, and **0.2 percent** from June. **Core PCE** — excluding food and energy — rose **3.3 percent** year over year and **0.2 percent** on the month. The core figure carries more weight because food and energy swing with weather and oil, obscuring the underlying trend. The point of this release is that core at 3.3 percent is **exactly where it was in June**. Alongside the price data, personal income rose **0.4 percent** while **real spending was flat** — households earned more but, adjusted for prices, did not buy more.
- How is PCE different from CPI?
- **What goes in the basket, and how quickly the basket changes.** CPI measures what consumers pay directly, with relatively fixed weights. PCE includes spending made **on the consumer's behalf** — notably healthcare paid by insurers or government — and updates faster for substitution, meaning it reflects people switching from expensive goods to cheaper ones. As a result **PCE usually reads lower than CPI**. When the Federal Reserve says its target is 2 percent, that 2 percent is **PCE, not CPI**. For the same month of July 2026 the two gauges disagreed: **CPI came in at 3.4 percent on August 12, PCE at 3.7 percent on August 26** — an unusual inversion, and this page could not establish which components drove it.
- What does this mean for interest rates?
- **It settles nothing, which is itself the result.** The live US debate is not about when to cut but about **whether to hike again**. The July FOMC minutes split **9 to 3**, with three votes against an increase. Against that backdrop, core inflation holding at 3.3 percent for a second month is neither bad enough to force a hike nor good enough to end the argument. Market pricing puts the odds of a September increase at roughly **one in three**. So the next variable is not data but a person: **Fed Chair Kevin Warsh's first Jackson Hole keynote on August 28**. Warsh took office on May 22, 2026, and this Fed does not signal its intentions before meetings — which makes the speech carry real information rather than confirmation.
US personal consumption expenditures prices rose 3.7 percent from a year earlier in July.
The Commerce Department published the figure on August 26, 2026.
Core PCE came in at 3.3 percent — the same number as June.
1. The release
| Measure | Monthly | Annual |
|---|---|---|
| Headline PCE | +0.2% | +3.7% |
| Core PCE | +0.2% | +3.3% |
| Personal income | +0.4% | — |
| Real spending | flat | — |
The point is not that inflation is high. It is that it did not move.
Core PCE has printed 3.3 percent for two consecutive months. Prices are not descending toward the target, and they are not accelerating away from it. They are sitting still.
2. Why this gauge and not CPI
| Item | CPI | PCE |
|---|---|---|
| Agency | Labor Department | Commerce Department (BEA) |
| Coverage | What consumers pay directly | Includes spending made on their behalf (insurers, government) |
| Basket updates | Relatively fixed weights | Reflects substitution faster |
| Typical level | Higher | Lower |
| Basis of the Fed's 2% target | No | Yes |
For the same month of July 2026 the two gauges disagreed: CPI 3.4 percent, PCE 3.7 percent.
That is an inversion of the usual relationship. This page confirmed only that differences in composition can produce such a month, and could not establish which components caused it here.
3. Income up, spending flat
The same release carries more than prices.
- Personal income +0.4 percent — earnings rose.
- Real spending flat — adjusted for prices, households did not buy more.
Three readings fit that combination: savings rose, the extra income was consumed entirely by higher prices, or households are deferring purchases. This release does not distinguish between them.
4. The US argument is about hiking, not cutting
| Date | Event | What it showed |
|---|---|---|
| August 8 | July payrolls -23,000 | The growth signal is weak |
| August 12 | July CPI 3.4% | Prices stuck in the 3s |
| August 19 | July FOMC minutes 9–3 | Three votes against a hike; the committee is split |
| August 26 | Core PCE 3.3% (second month) | Neither side gains ground |
Had inflation deteriorated, the hawks would have had their case. Had it clearly broken lower, the argument would be over. Nothing happening is the content of this print. Market pricing leaves September odds at roughly one in three.
5. So the next input is a speech
| Item | Detail |
|---|---|
| Jackson Hole symposium | August 27–29, Wyoming. Theme: "Financial Innovation: Implications for Payments and Policy" |
| Warsh keynote | August 28, around 10 a.m. Eastern. Livestreamed by the Kansas City Fed, text posted as he begins |
| Why it counts | First Jackson Hole address since he took office May 22, 2026 |
| Expectation | 69 percent of surveyed fund managers expect a neutral tone |
There is one more reason the speech carries weight: under this chair the Fed no longer telegraphs its intentions ahead of meetings. When a central bank stops pre-committing, its set-piece speeches stop being confirmation and start being information.
This page covered the setting in "Jackson Hole 2026: Warsh, not Powell, takes the podium" and "What the Jackson Hole meeting is."
6. What could not be confirmed
- Versus forecast — outlets split between "slightly above" and "in line"; the consensus figure itself is unconfirmed.
- CPI/PCE inversion — the component-level cause was not established.
- September odds — "about one in three" is market-derived; instrument and timestamp unspecified.
- Real spending — the exact decimal behind "flat" was not confirmed.
- Next checkpoint — Warsh's August 28 text. September pricing gets reset when it lands.
Sources
- Bloomberg — Key US Inflation Gauge Posts Muted Advance, Spending Stalls
- Eye On Housing (NAHB) — PCE Inflation Remains Sticky
- Money Today — US July PCE up 3.7% year over year, slightly above forecasts
- Etoday — US July PCE rises 3.7% year over year, modestly above market expectations
- Newsway — US July personal income up 0.4%; real spending flat, PCE prices 3.7%
- Investing.com — Roundup of economist and analyst reactions to the July PCE data
- Babypips — Jackson Hole 2026: All Eyes on Warsh