FX.co ★ US Core Inflation Gauge Ticks Up to 3.6% in September, Extending Fed Dilemma

The US PCE Price Index, the Federal Reserve’s preferred measure of inflation, accelerated to 3.6% year-over-year in September 2026, up from 3.4% in August 2026. The latest data, updated on 29 October 2026, indicate that price pressures remain stubbornly above the Fed’s 2% target, complicating the outlook for monetary policy.

The September reading shows that inflation, as measured by PCE on a year-over-year basis, has edged higher rather than continuing to ease. The “previous” figure of 3.4% reflected the change in August prices compared with August a year earlier, while the “actual” 3.6% marks the annual change for September. This pickup underscores that, despite earlier signs of cooling, underlying inflation dynamics in the US economy remain persistent.

With the PCE Price Index now moving further away from August’s level, markets and policymakers will closely watch coming data to assess whether September’s increase is a temporary uptick or the start of a renewed inflation trend, as the trajectory from here will be central to expectations for the Fed’s next steps.