FX.co ★ US Core Inflation Gauge Eases to 3.4% in August, Extending Cooling Trend

The US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred gauge of underlying inflation, eased to 3.4% year-over-year in August 2026, down from 3.7% in July 2026. The latest figures, updated on 30 September 2026, indicate a continued cooling in price pressures compared with the same period a year earlier.

On a year-over-year basis, both the July and August readings compare inflation in each month to their respective levels a year ago, underscoring a gradual but steady deceleration in consumer price growth. The slip from 3.7% to 3.4% suggests that underlying inflationary pressures may be moderating, a development closely watched by policymakers, investors and businesses as they assess the trajectory of US monetary policy and the broader economic outlook.

While the index remains above the Federal Reserve’s long-run target, the latest data could strengthen the case for a more patient stance on further tightening, as markets weigh how quickly inflation can return to more comfortable levels without undermining economic momentum.