US Core PCE Inflation Held at 3.0% in August. BEA Also Revised July Down to 3.0%
The core PCE price index, the Federal Reserve’s preferred gauge of underlying US inflation, rose 3.0% in the year to August, the U.S. Bureau of Economic Analysis said in its Personal Income and Outlays release at 8:30 a.m. ET. The Dow Jones consensus carried 3.3%. US equities were higher through the late morning: at 11:50 a.m. ET the S&P 500 was up 0.64% from Tuesday’s close at 7,721.05, and the NASDAQ Composite was up 1.14% at 27,104.20.
The same release restated July. On the restated numbers, July’s core PCE was 3.0% as well.
The July that August gets measured against changed this morning
When BEA published July’s data on August 26, July’s core PCE read 3.3% year over year. A 3.3% forecast for August was a forecast that the annual rate would sit exactly where the previous month had put it.
That figure is no longer on the record. Today’s release carried the annual update of BEA’s national accounts, described on page 3:
“Today’s release presents monthly results from the annual update of the National Economic Accounts. The revisions for estimates of personal income and outlays begin with January 2021.”
On the revised basis, July reads 3.0%, not 3.3%. Measured against the July figure that existed yesterday, August came in three tenths lower. Measured against the July figure that exists today, August is unchanged. BEA’s own comparison table makes the second reading explicit: the last month equal to August’s 3.0% core rate is July, and the last above it is May at 3.2%.
The headline index did the same. July was first published at 3.7% and now reads 3.4%; August is 3.4% too, with June’s 3.5% the last higher month.
None of this was sprung on anyone. BEA flagged the vintage break in the same July release that printed the 3.3%, in a footnote on page 4: “Updated monthly estimates of personal income and outlays will be released on September 30, along with the estimate for August 2026.”
The revision was not confined to prices. July’s personal income growth went from 0.4% to 0.3%, its disposable income growth from 0.5% to 0.4%, and its personal saving rate from 3.0% to 4.6%. Page 4 gives the sources: first-quarter wage and salary data from the BLS Quarterly Census of Employment and Wages, revised Current Employment Statistics data for April through July, and updated Medicaid information from the Centers for Medicare and Medicaid Services.
The monthly rate went the other way
A year-over-year rate is the cumulative change in the index from twelve months earlier, so August’s 3.0% carries the whole preceding year inside it, and the annual update rewrote that whole span. The monthly figures describe August by itself. They accelerated.
Core PCE prices rose 0.2% in August against 0.1% in July on the revised basis, the fastest month since May’s 0.3%. Headline PCE prices rose 0.3% against July’s 0.1%, the fastest since May’s 0.4%. The two sat a tenth apart in August where the revised July had them identical at 0.1%, so food and energy added to the headline rather than subtracting from it.
Nominal consumption spending rose $190.8 billion, or 0.9%, tying March for the strongest month since December 2024’s 1.0%. Real spending, after prices, rose $92.8 billion or 0.6%, the strongest since March 2025’s 0.7%. The composition swung hard. On page 2, August’s rise “reflected increases of $114.1 billion in spending on goods and $76.7 billion in spending on services”, where the July release a month ago described “an increase of $86.2 billion in spending on services that was partly offset by a decrease of $49.9 billion in spending on goods.” On each month’s figures as first published, goods spending went from a $49.9 billion fall to a $114.1 billion rise. On that same basis, the page 2 bar charts put the categories behind the swing, and it is broad: the four largest movers across the two months are all goods, within about $5 billion of each other. Gasoline and other energy goods is the largest of them, going from a $14.0 billion decline in July, the biggest single fall that month, to a $20.9 billion increase in August. Those are changes in spending in dollars at seasonally adjusted annual rates, not prices.
Income did not keep up. Personal income rose $66.6 billion (0.2%) and disposable personal income rose $68.6 billion (0.3%), which BEA attributes on page 4 primarily to compensation and government social benefits. Real disposable income, what households have left after taxes and inflation, fell $4.9 billion in chained dollars even though the percentage change rounds to 0.0%, after 0.3% in July. It is the first 0.0% reading since December 2025.
Households funded the difference out of savings. Personal saving fell $122.1 billion to $990.2 billion, and the saving rate dropped to 4.1% of disposable income from a revised 4.6% in July. On BEA’s comparison table that is the lowest saving rate since November 2022.
None of that says inflation is reaccelerating: one month does not carry the weight, and the annual rate did not rise. But on one consistent basis the twelve-month core rate held steady, the monthly rate picked up, spending swung into goods, and August’s jump was paid for by saving less.
The move sat in US mega-caps, not in Treasuries
The gains were concentrated in the largest US names. At 11:50 a.m. ET Alphabet was up 3.22% at $352.47 USD, Apple up 2.45%, Microsoft up 1.98%, Amazon up 1.71% and Nvidia up 1.24%. Treasuries did not move with them: the US 10-year yield was 5.272% on our read at the same time, against a prior close of 5.255%, about 1.7 basis points higher, so the bond market did not trade the print as a dovish surprise.
Owning that list from Canada means owning a currency position too, and the loonie barely moved: CAD/USD was 0.7042 against Tuesday’s 0.7047. Our guide to Canadian Depositary Receipts covers holding the same US names in Canadian dollars.
The TSX did not join in
The S&P/TSX Composite was down 0.32% at 35,334.57, against Tuesday’s close of 35,447.01. The sector picture underneath comes from the iShares sector ETFs, which are not the TSX’s own sector indexes and can diverge from them. On that basis the iShares S&P/TSX Capped Materials ETF was off 1.36% and the Capped Financials fund off 0.89%, while Capped Energy led at up 1.65% and Capped Information Technology was up 0.75%. September 30 is also the last day of the quarter, so a single session’s sector readings are worth holding loosely.
Oil was higher, on a read taken later in the session. The WTI November contract traded at $91.30 a barrel at 12:11 p.m. ET, against Tuesday’s settlement of $89.37 in our own settlement-window record. The producers behind that exposure sit on our Canadian energy stocks page.
No cuts are in progress, and both decisions land October 28
The easiest way to misread this morning is as a step toward rate cuts. The Federal Reserve’s target range is 3.75% to 4.00%, raised by 25 basis points from 3.50% to 3.75% at the September 15-16 meeting and effective September 17. That was the Fed’s only move of the year and it was upward. What a 3.0% core rate argues against is the next increase, not the direction of the cycle.
The Bank of Canada sits 150 basis points below the bottom of that range at 2.25%, with spot CORRA at 2.30%, and it is the one with a hike priced in. As of our September 29 pull, one-month CORRA futures on the Montreal Exchange priced 13.56 basis points into the October 28 decision, an implied 2.39% and roughly a 54% chance of a 25 basis point increase.
Canada’s picture underneath its own headline rate looks different again. Canada’s August CPI held at 3.0%, but CPI-trim ran at 1.9% and CPI-median at 2.0%, both at or below the Bank’s 2% target. That 3.0% is a headline rate, set against a US headline PCE rate of 3.4%.
Where each bank sits against its own gauge is the plainer read on the policy gap. The bottom of the Fed’s range, 3.75%, sits three quarters of a point above US core PCE at 3.0%, while the Bank of Canada’s 2.25% sits a quarter point above CPI-median at 2.0%. One is holding policy clearly above its own preferred gauge; the other is barely above it.
Both decide on Wednesday, October 28: the Bank of Canada at 09:45 ET with its Monetary Policy Report, the Fed at 14:00 ET on the second day of its October 27-28 meeting. BEA’s September release follows on October 29, the day after, so this morning’s numbers are the last PCE reading the Fed will have in hand when it decides.
What it means for a Canadian portfolio
An annual update moves the baseline, not just the latest observation. Any comparison against US inflation data published before this morning now spans two vintages of the same series.
The session itself split into an American story and a Canadian one: the gains were in US mega-caps, the currency was close to flat, and Canadian holdings concentrated in materials and financials sat this one out.
Market data as of 11:50 a.m. ET on September 30, 2026, oil at 12:11 p.m. ET. Live quotes from Yahoo Finance.
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