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US August Core PCE YoY Growth Rebounds to 3.1%, Consumer Resilience Drives Inflation Stickiness

2026-10-30

Core Overview: Latest data from the US Commerce Department's Bureau of Economic Analysis shows that the year-over-year growth rate of the US Core Personal Consumption Expenditures (Core PCE) price index climbed to 3.1% in August 2026, slightly higher than July's 3.0%. This preferred inflation gauge of the Federal Reserve rebounded after several months of cooling, highlighting that the last mile in the fight against inflation remains full of challenges.

Key Components: Further breaking down the structural composition of the Core PCE, the research model of the San Francisco Fed indicates that in the price upward momentum in August, "demand-side" factors contributed approximately 1.17 percentage points, while "supply-side" factors contributed about 1.07 percentage points. In contrast, the prices of core service items remain sticky, indicating that strong employment and real disposable income have supported service consumption. This implies that the sources of price pressures are extremely broad.

Deep Attribution: Analytics firms point out that resilient consumer demand is the main driver supporting core inflation. A commentary from Forex.com mentioned that US consumption has not noticeably decelerated in tandem with price pressures, and improvements in core inflation cannot be directly equated with a rapid easing of financial conditions. In the absence of a significant decline in the demand for goods and services, enterprises still possess the pricing power to pass on costs, stalling the progress of bringing Core PCE down to the 2% target.

Outlook and Risks: Looking ahead, inflation data in the short term (1-2 months) may fluctuate at high levels around 3% due to base effects. The attitude of Federal Reserve officials regarding the need for further tightening will dominate market sentiment and drive volatility in long-end US Treasury yields. In the medium term (3-6 months), if the labor market does not show substantial cooling, the uncertainty of the terminal rate will be repriced; investors need to be mindful of the tail risks that high interest rates may trigger for small and medium-sized enterprise financing and end-consumer credit.

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