Federal Reserve Metrics on Inflation

The US Bureau of Economic Analysis (BEA) announced on Friday that inflation rose by 0.3% in August, up from July’s 0.2% increase.

The Personal Consumption Expenditures (PCE) price index, which gauges the value of various goods and services, climbed 2.7% year-on-year last month. Meanwhile, the Core PCE, which omits food and energy costs, increased by 2.9% in August, as reported by BEA.

I think this aligns with earlier projections where the yearly change for the PCE price index was expected to be around 2.7%, and Core PCE was anticipated to reach 2.9%. The Federal Reserve Bank of Dallas mentioned this last Tuesday. In July, the PCE price index saw a 2.6% rise compared to the same month last year, while core inflation remained at 2.9%, as noted on August 29.

In the meantime, a report set to be released focuses on the real gross domestic product (GDP), showing stronger-than-anticipated growth for the second quarter of 2025.

Additionally, wholesale inflation experienced an unexpected decline in August, according to the Bureau of Labor Statistics (BLS), which recorded a drop in the producer price index. However, employment figures released on September 10 indicated that the US economy added only 22,000 non-farm payroll jobs last month, a somewhat disappointing figure.

It’s worth mentioning that on September 17, the Federal Reserve decided to lower interest rates by a quarter point.