macroboltSpecial Coverage

July PCE: Core Inflation Holds at 3.3% as Income Jumps 0.4%

Published August 26, 20266 min read

Empty grocery aisle at dawn with a single shopping cart lit in muted navy and gold tones — Personal income rose 0.4% in July, more than double forecasts, even as core PCE inflation held steady at 3.3% year over year. Illustration: MarketIntelLabs

July's Personal Income and Outlays report split the difference between two competing narratives. Core PCE inflation, the Fed's preferred gauge, matched the 0.2% consensus exactly and held at 3.3% year over year, the same pace it ran in June. Personal income, meanwhile, jumped 0.4% on the month, more than double the 0.2% economists expected, and it did so without pulling the inflation needle in the process. That combination, income accelerating while price growth stays put, is the opposite of the "hot economy, hot prices" story markets have been pricing since the Fed's hawkish hold two weeks ago.

GDP Second Estimate, July PCE Test a Tape Near Highs (See Fed Governor Cook's recent remarks .)

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