July PCE inflation index held at 3.7% annual pace, hotter than expected
The Personal Consumption Expenditures index was unchanged from June, highlighting stubborn inflationary pressures.
Updated on: August 26, 2026 / 9:17 AM EDT / CBS News
The Personal Consumption Expenditures index — the Federal Reserve's preferred inflation measure — held at a 3.7% annual pace in July, slightly higher than forecasted and reflecting persistent cost pressures for consumers.
Economists polled by FactSet had predicted a 3.6% annual increase. Wednesday's report instead showed that inflation remained unchanged from June.
PCE tracks changes in the prices of goods and services bought by U.S. households. The measure is closely tracked by the Federal Reserve, which uses it to inform its interest rate decisions.
PCE has eased after reaching a three-year peak in May , but remains well above the Fed's 2% target. The Iran war has pushed up oil and gas prices, eating into consumers' budgets and putting pressure on household spending.
"The United States still has an inflation problem. PCE inflation came in hotter than expected," said Heather Long, chief economist at the Navy Federal Credit Union, in an email. "The impacts of the war in Iran are still apparent with $4 gas and $5.60 diesel."