- Key data day. The US Bureau of Economic Analysis releases August Personal Consumption Expenditures inflation on September 30 at 8:30 AM ET—the Federal Reserve’s preferred inflation gauge—alongside final second-quarter GDP figures and corporate profits data.
- The forecast. Core PCE, which excludes food and energy, is expected to rise to 3.4% year-over-year in August, up from 3.3% in July—still far above the Fed’s 2% target and consistent with another rate increase.
- Warning signs. Consumer confidence fell to 81.9 in September from 89.4 the prior month, well below the 89.0 forecast, suggesting households are already pulling back as borrowing costs rise.
The Federal Reserve’s preferred inflation gauge arrives on September 30, alongside final revisions to second-quarter GDP growth and a fresh read on consumer spending. The August PCE release comes two weeks after the Fed raised its benchmark interest rate by 25 basis points to a target range of 3.75%–4.00% in a unanimous vote—its first rate hike in three years.
What the Data Is Expected to Show
Analysts forecast that core PCE inflation rose 0.3% month-over-month in August and 3.4% year-over-year, according to the economic calendar compiled by KuCoin Research. That would be a step up from July’s 3.3% annual reading. Headline PCE, including food and energy, is projected at 3.7% year-over-year for the second consecutive month. Both readings sit well above the Fed’s 2% target. For comparison, core PCE stood at 3.0% in December 2025 before climbing through the first three quarters of 2026.
Rate Hike Implications
Federal Reserve Governor Michael Barr said after the September meeting that further rate increases “will likely be needed to slow inflation.” The Fed’s updated dot-plot projects the possibility of one additional hike before year-end, which would put the policy rate at 4.00%–4.25%. A core PCE print at 3.4% would reinforce that projection. A surprise above 3.5% would firm expectations for a November hike considerably. The 10-year US Treasury yield reached 5.29% on September 29—its highest level since June 2007—signalling that bond markets are already pricing in a prolonged elevated-rate environment.
Consumer Signals Going into Q4
Alongside the PCE data, separate indicators are flashing caution. The Conference Board’s September consumer confidence index came in at 81.9, below the 89.0 forecast and sharply down from August’s 89.4. The Dallas Fed Services Index for September fell to -1.8, against a forecast of +1.0 and a prior reading of +4.2. These numbers suggest that while inflation remains elevated, consumers are beginning to respond to higher borrowing costs by pulling back on discretionary spending. Whether August PCE confirms that the Fed’s first hike in three years is working its way through the economy will be the central question as Q4 begins.