August's PCE report: the Fed's preferred inflation gauge rose 0.3% — and BEA revised the months before it

The Bureau of Economic Analysis released its August 2026 Personal Income and Outlays report on September 30, and it carries two things worth knowing about: the newest reading of the Federal Reserve's preferred inflation gauge, and a statistical housekeeping change that altered the months before it. If you read our July PCE explainer, some of the July numbers there have since been revised, and this post explains how.

What PCE is, and why the Fed watches it

PCE stands for Personal Consumption Expenditures. The Fed's longstanding 2% inflation goal is defined, in the Fed's words, "as measured by the annual change in the price index for personal consumption expenditures" — not the Consumer Price Index. BEA documents why the two differ: PCE has a broader scope (it includes spending made on households' behalf, such as employer-sponsored health insurance) and uses a different formula than CPI. Different scope and math is why the two can diverge without either being wrong.

What August's report says

Month over month: the PCE price index rose 0.3% in August. Excluding food and energy (core), it rose 0.2%.

Year over year: the PCE price index is up 3.4% from August 2025. Core PCE is up 3.0%. Both remain above the Fed's 2% target.

BEA's table puts the prior month alongside: the PCE price index rose 0.1% in July and core rose 0.1%, so August's monthly pace was faster on the headline measure (0.3% versus 0.1%) and on core (0.2% versus 0.1%).

The revision: why July looks different now

BEA states that this release "presents monthly results from the annual update of the National Economic Accounts," with revisions to personal income and outlays beginning with January 2021. That matters if you compare across reports. Our July post, written from the release that was current at the time, reported a 0.2% monthly rise in July's PCE price index, a 3.7% year-over-year rate, and a 3.0% saving rate. In today's release, BEA's table shows July's monthly price change at 0.1%.

The release text doesn't restate July's revised year-over-year rate, and it doesn't say how much of the gap between last month's 3.7% and August's 3.4% reflects revisions rather than price movement. So treat the drop as a fresh reading on a revised series, not as a clean one-month decline. The habit that protects you: when a statistical agency does an annual update, compare figures only within the same vintage of data.

Income, spending, and saving

The same report covers household finances, which CPI does not:

• Personal income rose $66.6 billion (0.2%); disposable personal income, after taxes, rose $68.6 billion (0.3%). BEA says the income gain mainly reflected compensation and government social benefits.
• Consumer spending (PCE) rose $190.8 billion (0.9%) in current dollars: $114.1 billion more on goods and $76.7 billion more on services. After adjusting for price changes, real PCE rose $92.8 billion (0.6%). July's real PCE growth is shown at 0.1% in the same table.
• Real disposable income was flat (0.0%) in August.
• Personal saving was $990.2 billion, a saving rate of 4.1% of disposable income.

Nominal spending grew by roughly three times the dollar increase in income. One month can't say whether that's a lasting shift or a bounce after a soft July, and BEA's release doesn't assign a cause.

How it compares with August CPI

August's CPI, released by the Bureau of Labor Statistics on September 11, showed all-items inflation up 0.4% for the month and 3.4% from a year earlier, with core CPI up 0.3% for the month and 2.4% from a year earlier. So headline inflation reads the same 3.4% on both yardsticks this month, while core runs hotter on PCE (3.0%) than on CPI (2.4%). The monthly story differs too: BLS attributes over a third of CPI's monthly increase to gasoline, and PCE's headline moved less (0.3%). That's consistent with the scope and formula differences above, not a contradiction.

What this does — and doesn't — tell you

It doesn't tell you what the Fed will do next. The Federal Open Market Committee raised its target range on September 16; the Fed's calendar lists its next meeting for October 27-28. A single PCE print is one input among many. It also doesn't describe your household: PCE is a national average, not a receipt for your groceries, rent, or gas.

For your own planning, the practical takeaways are modest. Inflation by the Fed's preferred measure is still well above 2%, so when you compare a savings account's APY, it helps to set it against a 3.4% annual price rise. And if you're tracking inflation month to month, note the data vintage.

How we sourced this

Every PCE figure above comes from BEA's own August 2026 Personal Income and Outlays release; CPI figures come from BLS's CPI release. We show our sources for the same reason we publish our scoring methodology and disclose how we make money: a number is more useful when you can check it yourself. BEA's next release, covering September, is scheduled for October 29, 2026.

The takeaway

August's PCE report shows the Fed's preferred inflation gauge up 0.3% for the month and 3.4% year over year (core: 0.2% and 3.0%), alongside BEA's annual revision to earlier months. Compare figures within the same data vintage, read PCE next to CPI instead of in place of it, and remember that one month doesn't set a trend.