US PCE price index holds at 3.7% year-over-year in July 2026 as inflation stabilizes

The Federal Reserve’s favorite inflation thermometer just delivered a reading that’s neither exciting nor alarming. The Personal Consumption Expenditures price index rose 3.7% year-over-year in July 2026, matching June’s figure and coming in just a tick above the 3.6% consensus forecast. The Bureau of Economic Analysis published the numbers on August 26, and markets got exactly what they were bracing for: confirmation that inflation is cooling from its May peak of 4.1%, but still sitting well above the Fed’s 2% target. On a monthly basis, the PCE index ticked up 0.2%. The core numbers tell a similar story Strip out the volatile food and energy components, and the picture looks roughly the same. Core PCE rose 3.3% year-over-year and 0.2% month-over-month, unchanged from June’s reading. The trajectory matters more than any single data point here. May 2026 printed at 4.1% on the headline number, meaning the decline from that level to 3.7% over just two months represents meaningful deceleration. Consumers keep spending, but real gains are thin Personal income increased by $115.1 billion in July, a 0.4% month-over-month gain. Disposable personal income climbed $125.9 billion, or 0.5%. P...