Bloomberg Surveillance · Wednesday, September 30, 2026
The latest PCE inflation data revealed that the price index rose 0.3% month-over-month and 3.4% year-over-year. However, core PCE, excluding food and energy, showed a more moderate increase of 0.2% month-over-month and 3.0% year-over-year, which was softer than expected but still above the Federal Reserve's 2% target. Consumer spending rebounded strongly, but income growth was sluggish, suggesting consumers are spending more than they earn.
“The personal consumption expenditures price index rising three-tenths of a percent month over month as consumers paid more for many goods and services. Year over year, though, the PCE index up 3.4%. This is less than the 3.7% expected and less than the 3.7% we saw the prior month.”
“Let's move to core PCE, which excludes volatile food and energy prices. Month over month, rising 0.2%, so less than the 0.3% expected. And right in line with the prior month, core PCE year over year also coming in a bit softer here, up 3% versus estimates for 3.3%.”
“Meantime, consumer spending rebounding sharply in August, up 9 tenths of a percent in line with estimates and a lot higher than the 2 tenths of a percent rise we saw the prior month. Meantime, personal incomes up a scant two-tenths of a percent. So we were spending more than we were bringing in.”