Personal consumption expenditures (PCE) inflation is expected to be 2.7 percent over the 12 months ended in August 2025 and has been above the Federal Open Market Committee’s 2 percent target since early 2021. (We estimate August PCE inflation using the August Consumer Price Index and producer price index.) To better assess the underlying momentum in price changes, volatile items are often omitted from the inflation calculation. Core PCE, which excludes food and energy items, is expected be 2.9 percent in August and has steadied above 2.5 percent since mid-2024. When thinking about where inflation is headed, it is ... (full story)