This article about the January 2026 PCE Inflation Report is being developed and will receive updates with more information.
Consumers are still grappling with rising prices, as noted in recent reports. The Department of Commerce announced on Friday that the Personal Consumption Expenditure (PCE) index increased by 0.3% month-over-month in January, and by 2.8% year-over-year. This monthly rise aligned with what economists predicted, but the annual figure was just below their 2.9% expectation.
Looking at the Core PCE—which excludes food and energy—there was a 0.4% increase from December and a 3.1% rise year-over-year. These figures also met economists’ forecasts derived from LSEG data.
The Federal Reserve is keenly observing the headline PCE as they aim to steer inflation back to their targeted 2%. They consider the core data a more reliable measure of inflation trends. Interestingly, the headline PCE inflation slightly dipped from December’s 2.9%, while core PCE saw a rise from 3%.
Fed officials are watchful of geopolitical tensions, especially the situation in Iran, due to its potential impact on inflation.
In January, commodity prices experienced a 1.3% annual rise, down from December’s 1.7%. Comparatively, last summer’s inflation rates were even less robust, showing only a 0.6% increase in June and July, along with a 0.9% rise in August.
Durable goods also saw a price increase of 2.2% in January relative to the same month last year, slightly up from 2.1% in December. Between June and November, this index hovered around 1%. On the other hand, nondurable goods prices only increased by 0.8% in January, a reduction from December’s 1.6% annualized rate and the lowest since August.
Service prices continued to rise, hitting a 3.5% increase year-over-year in January, surpassing the 3.4% inflation rate observed for services between September and December.
The personal savings rate, in terms of disposable income, was 4.5% in January. This marks an uptick from the 4% rate seen from October to December and represents the highest level since reaching 4.5% in July of the previous year.
