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Fed's Preferred Inflation Gauge Cools in August

8 sources · updated 2026-10-01
Left 33% Center 0% Right 67%
2 left · 0 center · 4 right

What happened

On Wednesday, the U.S. Commerce Department reported that the personal consumption expenditures (PCE) price index — the Federal Reserve's preferred inflation gauge — rose 0.3 percent in August from July and 3.4 percent from a year earlier, below economists' forecasts of about 3.7 percent annually. Core PCE, which excludes food and energy, rose 0.2 percent on the month and 3.0 percent over 12 months, versus forecasts of 0.3 percent and 3.3 percent. The Bureau of Economic Analysis applied annual revisions to prices for legal services, software and computer accessories, and portfolio management, lowering July's headline annual PCE from 3.7 percent to 3.4 percent and core from 3.3 percent to 3.0 percent. Gasoline prices jumped 4.4 percent in August, personal spending rose 0.9 percent, and second-quarter GDP was revised up to a 2.2 percent annualized rate from 1.5 percent. The report followed the Fed's September quarter-point increase in the federal funds rate to a 3.75–4 percent range, its first hike since 2023, and traders then reduced the odds of another increase at the October meeting.
Sourcing check · Mostly on the record · 6 articles

5 of 6 articles cite a named source for the story. It was on the record from the first report.

What these terms mean and how they're counted
On the record · names a source 5 of 6
On the record means the article cites a source by name for the story's main claim: a person, or an institution speaking officially, such as a company statement or a named agency's spokesperson. The opposite is an unnamed source. The count is how many of the counted articles cite at least one such source; the names are everyone named across them, each once however the articles spell it. Here: Commerce Department, Bill Adams, Bret Kenwell, David Russell, Sonu Varghese and Chris Zaccarelli
Primary evidence · cites a document or data 6 of 6
Primary evidence means the article cites a record you could check yourself: a court filing or ruling, a dataset or report, a recording or transcript, an official statement or press release, market data. A quote is not a document. The count is how many articles cite one. Here: official data release, official statistics
Credits another outlet 0 of 6
The article says the story comes from another outlet's reporting (“first reported by Reuters”). Those articles relay the story; they are not independent confirmation. Here: Each article presents its own reporting.
Unnamed sources 0 of 6
The main claim is attributed to people who are not identified: “people familiar with the matter”, “officials said”. The count is how many articles do this.
How it developed
When the first report landed and whether it named anyone; when the first named source and the first document appeared. Here: First report Sep 30, 12:35 UTC by Fox Business, naming its source. First document in the first report, from Fox Business (official data release).
Not counted 0
Opinion, analysis and video pieces, and articles too short to assess. Every count above is out of the counted articles. An article republished under a new headline is one article.
This is about who is cited, not whether the story is true. Each source below says what it names. How we count
Omitted — what each side leaves out

Unpacked

The cooler annual print is a match to a restated July, not a drop from last month. The annual rate is held at 3.4 percent versus the revised July reading in right-leaning coverage at Fox Business. Core is described there as unchanged from July as well, and still far from target. The rewrite that lowered earlier readings goes unmentioned in left-leaning coverage at The Guardian, which reports only a beat versus estimates. That restatement is what turns a forecast miss into an apparent cooldown. The report is billed as "Good news" in left-leaning coverage at The Guardian. An economist in right-leaning coverage at Fox Business called the same release a "glass half empty." How much of the forecast miss was the new formula, and how much was prices actually slowing in August?
Bottom line

The miss versus a 3.7 percent forecast is what The Guardian sold as cooling. Fox Business says the annual rate simply matched a rewritten July.

The receipts — 1 fact one side's coverage lacks
  • It is unclear how much of the monthly change is from the BEA data-collection tweak versus actual price softening contextin New York Post · absent from left-leaning coverage
The Left View
Left-leaning outlets treated the miss versus forecasts as market-friendly while insisting the inflation problem is not solved. CNBC cited strategist Sonu Varghese that "even after major methodological revisions, PCE inflation is still running hot however you cut it," and Heather Long of Navy Federal Credit Union that the figures "show no progress in August on inflation" as "American consumers are feeling the squeeze." The Guardian called the reading "good economic news" that "buoyed hopes that the Federal Reserve might not hike rates as soon as next month," noting traders cut October-hike odds and that the White House has pressed for rate cuts, with inflation "the top issue for voters" and Donald Trump receiving "poor marks for his handling of the economy." Coverage also stressed that households kept spending and that New York Fed President John Williams said "there is no need for urgency," even as other officials had warned progress toward 2 percent had been knocked off course by tariffs and the war with Iran.
The Right View
Right-leaning sources stressed that inflation "cooled more than expected but remained elevated well above target" while "consumers continued to face price pressures." Fox Business quoted Fifth Third economist Bill Adams calling the report "a glass half empty," arguing it looked closer to target "because of how inflation is measured, not how it's trending" and that "You don't need your glasses on to tell the difference between 3% core PCE inflation and a 2% target." The New York Post said the print was "likely delaying another interest-rate hike until December," with investors arguing the Fed would "want to avoid coming off as politicized by raising rates just before the November midterms." Outlets tied the monthly increase mainly to energy costs amid the Middle East conflict, noted a declining personal savings rate, and argued that resilient growth and hiring showed the Fed "was probably correct in raising rates this month" even if it might now skip October.
Our Take (balanced)
The left's strongest argument is that a clear undershoot of forecasts, plus Williams's "no need for urgency," weakened the case for an October hike — evidenced by the drop in market odds and the Guardian's account of a "good economic news" rally. The right's strongest argument is that any improvement is largely a measurement revision rather than a new disinflation trend, while prices remain far from 2 percent alongside still-strong demand — evidenced by Adams's measurement-versus-trend contrast and core PCE still at 3 percent even after the rewrite. The central unresolved tension is whether the cooler August figures and BEA revisions amount to genuine progress that justifies waiting, or a statistical adjustment that leaves the same too-high inflation and resilient spending in place.

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