PCE Report Confirms No Surprises, US Demand Remains Strong

The PCE inflation figures for the month of August, published this Friday, September 27, confirm apparent stability, with progress as expected. A key indicator for the Federal Reserve, the PCE remains above the target, while American consumption continues to surprise with its strength. In a context of monetary tension, these data maintain uncertainty about the future trajectory of interest rates.

Inflation Under Control : The Figures Confirm the Path

While the Fed hesitates on the path to follow, the Department of Commerce report for August confirms that the American economy continues its course toward a price normalization without abrupt disruption.

Inflation remains measured, markets are reassured, and the Federal Reserve can maintain its strategy without premature adjustment. Thus, all data conform to the Dow Jones consensus forecasts, avoiding any major surprise.

Here are the main points to note from this release :

• Overall PCE index (monthly ): +0.3 % in August ;
• Overall PCE index (annual) : +2.7 %, compared to 2.6 % in July ;
• Core PCE index (excluding food and energy) : +0.2 % monthly / +2.9 % annual ;
• Price evolution by sector : by sector, prices rose 0.8 % in energy, 0.5 % in food, 0.4 % in housing, 0.3 % for services, and 0.1 % for goods.

These figures show that despite some targeted increases in the energy, food, and housing sectors, overall remains under control, with a core inflation rate still below the symbolic 3 % threshold.

The Fed, which uses the PCE index as its primary reference rather than the CPI, continues to judge this framework suitable for its medium-term inflation goal set at 2 %. The absence of a sharp acceleration thus supports the projections of two new rate cuts by the end of the year.

Strong Consumption

Beyond the inflation figures themselves, the report reveals a particularly robust consumption dynamic. In August, American household spending rose by 0.6 %, while personal incomes increased by 0.4 %, two figures above expectations, which demonstrate the strength of domestic demand.

For Chris Rupkey, chief economist at Fwdbonds, this trend illustrates a true comeback of the consumer : “clearly, consumers have made a real splash […] Summer was the chosen time for a spree of vengeful spending”, he commented.

Moreover, the personal saving rate increased to 4.6 %, a signal that households are not spending at the expense of their financial resilience.

Furthermore, economists note that tariffs introduced by the Trump administration had a limited effect on consumer prices. Many companies anticipated these measures by building up inventories or absorbing costs. This proactive management helped avoid an immediate transmission of price increases to households.

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The Federal Reserve can therefore continue, without haste, its rate-cutting path initiated last week, with a first reduction of 25 basis points. Markets anticipate another cut as early as October, although the possibility of a second move in December remains uncertain. The current stability of core inflation gives the Fed the necessary leeway, without having to face runaway price signals.