August PCE Inflation Report: Headline Matches Forecasts At 3.5%, Core Falls To 3.9%

Zinger Key Points
  • August PCE inflation report shows 3.5% YoY increase, matching expectations.
  • Personal income and spending both rise in August, aligning with market forecasts.

The Personal Consumption Expenditure (PCE) Price Index report for August — the Fed’s preferred inflation gauge — released Friday delivered mixed results, keeping investors on edge over the future of Fed’s decisions on interest rates.

August PCE Inflation Report: Key Highlights

  • The headline PCE price index increased from an upwardly revised 3.4% in July to 3.5% year-on-year in August 2023, matching the expected 3.5% and marking the second consecutive monthly rise.
  • The month-over-month change in the PCE price index was 0.4%, a notable jump from July’s 0.2% increase but below the expected 0.5%.
  • Excluding energy and food items from the basket, the core PCE price index dropped from 4.2% in July to 3.9% year-on-year in August, as expected. It marks the lowest core inflation reading since September 2021.
  • The month-over-month variation in the core PCE price index fell to 0.1%, slightly below both the previous reading and economists’ consensus of 0.2%.

Simultaneously , the Bureau of Economic Analysis announced that personal income saw a 0.4% increase in August 2023, aligning with the market consensus and following a 0.2% rise in July. Personal spending also saw a 0.4% month-over-month increase, in accordance with market predictions, and following an upwardly adjusted 0.9% surge in July.

Treasury yields saw a slight decline ahead of New York market open, following weeks of significant increases. The yield on the 10-year note dropped by 4 basis points to reach 4.53%. The US Treasury 10 Year Note ETF UTEN is down nearly 4% this month.

Following the PCE release, traders assigned an 85% probability to the Fed maintaining interest rates steady the upcoming November FOMC meeting. Market-implied probabilities for the December Fed meeting stand at 67% for no change and 33% for an interest rate hike.

Read also: US Government Shutdown Risks Data Blackout, Here Are 5 Key Alternatives For Investors

Photo via Shutterstock.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Macro Economic EventsTop StoriesEconomicsFederal ReserveInflationInterest RatesPCEPCE InflationPCE Price Index
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!