July 2026 PCE inflation data: headline above forecast, core in line

The Federal Reserve's preferred inflation gauge posted a modest upside surprise on Wednesday, with the headline reading coming in above forecasts even as the core measure held in line with expectations.

July's PCE price index registered a seasonally adjusted monthly gain of 0.2%, lifting the year-over-year rate to 3.7%, the Bureau of Economic Analysis reported. Each of those headline figures came in 0.1 percentage point ahead of the Dow Jones consensus, according to CNBC .

When food and energy prices are stripped out, the core PCE index advanced 0.2% on a monthly basis and 3.3% on an annual basis, the BEA said. Both readings landed exactly where analysts had expected, according to CNBC.

Fed policymakers watch both gauges, but core inflation is widely regarded within the central bank as a more useful guide to where prices are headed over time.

Consumer spending rose $36.3 billion, or 0.2%, in July, according to the BEA. The increase reflected a $86.2 billion gain in spending on services that was partly offset by a $49.9 billion decline in spending on goods. In real terms, PCE was essentially flat, rising less than 0.1%.

Personal income climbed $115.1 billion, or 0.4%, for the month, the BEA said. Disposable personal income rose 0.5%, and the personal saving rate came in at 3.0%. The BEA attributed the income gains primarily to increases in compensation, government social benefits, and personal income receipts on assets.

The next BEA release covering personal income and outlays for August 2026 is scheduled for September 30.