The personal consumption expenditures price index (PCE) rose 3.6% year-over-year in September 2026, according to the report published this Thursday by the Bureau of Economic Analysis (BEA) at 8:30 a.m. Eastern Time.
The monthly figure was 0.5%, the largest increase in six months, reflecting inflationary pressure that continues to erode the purchasing power of American households.
The main driver of the increase was energy: gasoline and other energy goods within the CPI surged 9.2% monthly, pushing up the component of non-durable goods (1.1%) and the total of goods (0.8%). Services rose by 0.3% for the month, with transportation services as the main contributor, increasing by 2.1%.
The indicator that most directly affects families is the real disposable personal income, which decreased by 0.3% monthly in September, compared to no change in August. The reason is arithmetic: nominal income grew by only 0.2% —approximately 54.5 billion dollars— while prices increased by 0.5% during the same period. Inflation outpaced income, reducing purchasing power.
Nominal consumption expenditure increased by $113.1 billion, representing a 0.5% monthly rise, with $35.1 billion spent on goods and $78.1 billion on services. However, real expenditure—adjusted for inflation—barely changed, rising by less than 0.1%, or just $2.6 billion. In practice, households spent more money to purchase nearly the same amount.
The personal savings rate stood at 3.8% of disposable income, with total savings amounting to 911.1 billion dollars.
The core PCE, which excludes food and energy and is the measure closely monitored by the Federal Reserve, rose by 0.3% monthly and 3.1% year-on-year, remaining 1.1 percentage points above the 2% target set by the Fed.
This index should not be confused with the Consumer Price Index (CPI), which the Bureau of Labor Statistics published on October 14 with a year-on-year reading of 3.7%. Both indices are complementary, not contradictory: the PCE includes expenses incurred "by and on behalf of" consumers — such as medical services covered by employers or public programs — and assigns different weights to each category.
Housing and gasoline have a greater weight in the Consumer Price Index (CPI), which explains why the general Personal Consumption Expenditures (PCE) (3.6%) is 0.1 points below the CPI, while the core PCE (3.1%) exceeds the core CPI (2.6%) by 0.5 points.
The Fed uses the PCE, not the CPI, to assess the achievement of its inflation target.
One day before the publication of this data, the Federal Open Market Committee (FOMC) voted 10 to 2 to maintain interest rates in the range of 3.75%-4.00%, just six weeks after having raised them for the first time in three years.
In its statement, the FOMC acknowledged that "inflation remains elevated" and warned that "the accumulation of more information will help the Committee determine the appropriate policy stance to ensure a timely return of inflation to the 2% target."
At least 16 of the 18 officials at the Fed anticipated at least one more rate hike before the end of 2026, according to the projections from September, which keeps open the possibility that credit will become even more expensive for families in the coming months.
Related videos:
Filed under: