The Fed's preferred inflation gauge ran at 3.4% in August. Will September's headline PCE reading top 3.5% on Oct 29?

The Commerce Department's Bureau of Economic Analysis reported on Oct. 29, 2026 that the personal consumption expenditures price index rose 3.6% year-over-year in September, up from 3.4% in August and above the 3.5% threshold bettors were watching. The index also rose 0.5% on the month, with the Bureau attributing much of the monthly jump to energy prices, as gasoline and other energy goods costs rose 9.2% from August. Core PCE, which excludes food and energy and is closely watched by the Federal Reserve, rose 3.1% year-over-year and 0.3% on the month, up from 3.0% in August. The release landed one day after the Federal Reserve held interest rates steady at its Oct. 28 meeting, and the hotter-than-expected inflation reading pushed real disposable income down 0.3% for the month, the data showed.

Seventy-eight percent of bettors had predicted the September reading would top 3.5%, and the community call was correct. The acceleration marked the highest headline PCE inflation rate since May 2026 and added to a string of readings showing inflation running persistently above the Fed's 2% target, fueled in part by tariff-related cost increases and rising energy prices through the fall.