Fed’s Preferred Inflation Gauge Points to Continued Price Pressures

U.S. inflation stayed stuck at an elevated level in August, reinforcing the Federal Reserve’s decision this month to raise interest rates for the first time in roughly three years.

Overall prices, according to the central bank’s preferred inflation gauge, rose 0.3 percent in August and were up 3.4 percent compared with the same time last year.

“Core” prices, which exclude volatile food and energy costs and are seen as a more reliable gauge of underlying inflation, rose 0.2 percent from the previous month. That represented a slight acceleration from July but was modestly better than forecasters had been expecting. Compared with the same time last year, those prices were up 3 percent, unchanged from July’s year-over-year increase.

Alongside the release of the latest Personal Consumption Expenditures price index, the Commerce Department also on Wednesday released methodological changes that altered how prices are calculated in several categories. The new formula, which was applied retroactively to price data going back to 2021, resulted in lower core inflation rates than previously reported.

Article source: https://www.nytimes.com/2026/09/30/business/pce-inflation-fed-interest-rates.html