Core PCE up 0.3 percent from June and 2.9 percent from a year ago.
PCE stands for Personal Consumption Expenditures. Core PCE, the Fed’s preferred measure of inflation, excludes food and energy.
PCE Month-Over-Month Details
- PCE: 0.20 percent
- PCE Goods: -0.13
- Core PCE: 0.273
- PCE Services: 0.348
The BEA reports PCE to a single decimal point. I calculate to 3 decimal places and round to 2.
Thus, PCE services was 0.002 away from being widely reported as 0.4 instead of 0.3.
PCE Goods vs Services
PCE goods was -0.13.
Tariffs still have not hit BEA measurements. But this is likely the last month we see this behavior as the pre-tariff inventory build gets sold.
Starting next month, expect to see a rise in PCE goods.
PCE services are very problematic as this has been one of the Fed’s concerns. Year-over-year details highlight the concern.
PCE Inflation Detail Year-Over-Year
The Fed’s inflation target is 2.0 percent.
The BEA reports an increase from 2.6 percent in June of 2024 to 2.9 percent in July of 2025. My calculations are as shown.
Either way, core PCE has made negative progress since June of 2024, thirteen months.
Meanwhile, expect a resumption in PCE goods inflation.
PCE and CPI Inflation Details
PCE and CPI Inflation Year-Over-Year Lows
- PCE bottomed at 2.10% in September 2024, now 2.60%.
- Core PCE bottomed at 2.63% in June 2024 (2.61% April 2005), now 2.88%
- CPI bottomed at 2.44% in September 2024, now 2.70%.
- Core CPI bottomed at 2.79% in March 2024, now 3.06%
Is this inflation progress?
Cleveland Fed Median PCE vs BEA Measures
The Cleveland Fed Median PCE indicator is an alternate measure to consider.
- Description: We calculate the median PCE inflation rate based on data released in the Bureau of Economic Analysis’ monthly Personal Income and Outlays report.
- Median PCE inflation is the one-month inflation rate of the component whose expenditure weight is in the 50th percentile of price changes.
- Benefits: By omitting outliers (small and large price changes) and focusing on the interior of the distribution of price changes, the median PCE inflation rate can provide a better signal of the underlying inflation trend than either the all-items PCE price index or the PCE price index excluding food and energy (also known as the core PCE price index).
This is the first I have considered this measure. I provide it for comparison purposes only, not a recommendation for use.
Judging from the above chart it’s hard to tell if the indicator is leading or lagging.
Cleveland Fed Median PCE vs BEA Measures Detail
Judging from the second chart, it appears median PCE is lagging.
Regardless, all three measures have bottomed and are heading higher.
Trump on Inflation
Trump administration Inflation Claims
- Contradictory claims: President Trump and the White House have offered different descriptions of the inflation situation since his January 2025 inauguration.
- “Defeating inflation”: A White House article from June 2025 declared that “America is Defeating Inflation,” highlighting that inflation had been below expectations every month of the new term.
- “No inflation”: However, other reports confirm that Trump has repeatedly claimed “there’s no inflation” since retaking office.
- False assertions debunked: Fact-checkers have highlighted several false claims made by the Trump administration in recent months:
- Core inflation: In July 2025, Trump claimed core inflation was “below 2%,” but the Consumer Price Index (CPI) showed it was 2.9%.
- Prices “all down”: The administration has falsely asserted that prices are “all down,” when in reality, consumer prices have continued to increase.
- Grocery prices “down”: The claim that grocery prices are down was also found to be false. Grocery prices in June 2025 were 2.4% higher than the previous year.
The claim that there is “no inflation” under the current Trump administration is not supported by official data, which shows that prices are continuing to rise
No Inflation in One Picture
It’s a good thing nobody counts home prices as inflation.
Moreover, none of the inflation measures include property taxes or homeowners’ insurance, only insurance on home contents.
Four Sarcastic Recommendations
- Trump needs to fire the head of the BEA, not just the BLS
- Trump needs to outlaw inflation reports by the Cleveland Fed
- Trump needs to fire Fed chair Jerome Powell and everyone on the Fed who disagrees with him. That’s all but two.
- Trump needs to post his own inflation numbers every month to let us know how well he is doing.
Back in the real word: “Houston, we have a problem.”
Related Posts
August 11, 2025: Is Homeowners Insurance Understated in the CPI? Shop Around!
Our Insurance went up by $2,000. Then another $2,000. Here’s our story.
August 12, 2025: Where Do You Spend Money on Food? How Screwed Up Are the BLS Weights?
Does the BLS match your budget?
Please read the above links.
The BLS and BEA measures of inflation are seriously screwed up.
Meanwhile Trump is trying to gain control of the Fed governors board. Although it’s the larger FOMC that typically sets rates? Perhaps Trump wants to eliminate paying interest on excess reserves so the big banks be forced to buy treasuries? The big banks will want Trump’s head if they do…..
Tariffs will stay until Trump appeals to the supreme court. Tariffs on steel aluminum and cars will stay. Trump I tariffs on China will stay. No refund to be paid. The 1974 law allows him to impose 15% tariffs for 150 days.
Our insurance went up $2,000 then another $2,000. That’s the service sector/
Trump’s tariffs on Chinese insurance companies are clearly starting to bite.
If your house burns down, to rebuild it you need:
Lumber – From Canada now tariffed
Dry wall – From China now tariffed
Marble – From Italy now tariffed
Rugs – From India now tarriffed
Labor – From latin america now deported
Paint – From China (chemicals) now tariffed
Nails/Metal – From Japan now tariffed
This is why your insurance rates go up, they need to pay for these things to rebuild your house. Try to think before your type.
And furnish..Appliances and furniture from Asia…now tariffed. Not to mention other parts needed to rebuild including plumbing, electrical, heating and cooling, fixtures, and various other pieces of equipment in modern homes all tariffed.
Or you could build a log cabin and learn how to hunt and gather.
After sailing with Mish in your yacht u paid a visit to his house.
No more TACO? Trump’s tariffs ruled illegal. ROFLMAO!
https://www.cnbc.com/2025/08/29/trump-trade-tariffs-appeals-court-ieepa.html
A federal appeals court ruled that most of President Donald Trump’s global tariffs are illegal, striking a massive blow to the core of his aggressive trade policy.Friday’s ruling is the Trump administration’s second straight loss in the make-or-break case known as V.O.S. Selections v. Trump.Trump later Friday attacked the appeals court as “Highly Partisan” and asserted that the Supreme Court will rule in his favor.
Massive deflation and chaos coming!
Yep. Mish predicted this.
All the curves in this post suggest a rounding bottom with the low about the turn of the year. If Powell wants to have a positive legacy, his chances would not likely be enhanced by lowering fed rates into a bottoming of prices, particularly with rates above their objective.
My opinion is employment should not be part of the fed’s objective as there is little they can do to work toward full employment without deleterious side effects, nor can full employment be defined precisely. Also, what good is targeting full employment if the economy ails? Cure the economy and employment likely takes care of itself.
Speaking of legacies, Trump will have to write his own as no objective documentation of his record so far would meet with his approval on anything but the border and related crime. It is true his policies are rearranging world trade, but the problem is the new order does not include America.
Another detail to keep in mind is price increases will be identified as inflation, but very likely the increases will be due to tariffs, supply chain disruptions, and difficulty planning for future operations and not an increase in money and/or debt.
So, the last six months MoM has been 0.34, 0.48, 0.10, 0.20, 0.26 & now 0.273 which annualizes out 3.276%, quite a high measure when compared to the 2% target. That February reading would annualize to 5.76%. Obviously, the Aug jobs numbers will give a clearer view of what the Fed will do later Sept. Currently, CME Group has a rate cut at 87%. I wonder what jobs number would give Powell pause to cutting rates? And then how high does core PCE rise before the end of the CY? Could the cause the Fed to go into another lengthy rate cut pause, assuming the labor market doesn’t start to clearly roll over?
This is what happens when you get a degree in Lysenko economics from Trump University.
Cleveland and BEA PCE do not indicate higher inflation. The PCE is taking a break to fill its gas tank. That’s all we know. It might cont down, bc C/S will send it down. The speed of the rise is higher than the speed of decline. It’s still above the base.
Chief brown noser waller, who aspires to take Powell’s chair at the fed, continues to say, mistakenly, that inflation is declining to 2%. I have never seen such a suck-up in my life. If he somehow gets the job, I want to be short the bond market.
Don’t fight the Fed was replaced by: don’t fight Trump !
Don’t forget soaring electric and water rates already baked into the inflation forecast. Then the deminimus tax, trump’s other tariffs, and bi-polar TACOing and you’re all set for all pain and no gain.
30 year bond is at 4.929 today. If it breaks 5 next week prepare for chaos.
Japan 30 year yields broke 3% and sit at 3.16% right now, that alone can start a cascading domino of pain.
Black September or October? Got collars or PUTS?
Stop complaining, u already made more than $4 millions.
I like MPO. In 2022, when RE prices peaked, I told him not to invest in RE. The more CSPAN bash TACO the more he is boasting about profit.
“Services inflation” means wage growth. Outsized wage increases are the most reliable indicator of future FOMC rate hikes. This PCE report gives the FOMC a good reason to potentially hold ratee steady rather than cut. You have been warned.
You mean JPow will borrow a page from TACO and PACO on rate cuts? Lol.
1W SPY option: SPY will close July 28/Aug 4 gap and breach Feb 2025 high. If the selling cont realized gains taxes will rise. Tariffs, de mini, student loans, payroll taxes…will fill gov coffer. Fred: US federal gov surplus/deficit is (-)500B. It might be doing A-B-C up from 2020 low and, in a sling shot, rise to a new all time high. As % of the GDP it will drop well below 100%. It will happen under Trump. Mish27, those jackasses, will benefit the most. Trump was elected to cut the budget deficit and to increase jobs, not to kiss Macron, Modi and Swiss Karen Keller Sutter asses !
King Chaos & his Court Jesters claim a bunch of weird shit:
(Bloomberg) — Trump cabinet officials told a federal appeals court that ruling the president’s global tariffs illegal would seriously harm US foreign policy, with Treasury Secretary Scott Bessent warning of “dangerous diplomatic embarrassment.”
Bessent Warns of US ‘Embarrassment’ If Tariffs Ruled Illegal
They are the embarassment.
Trump officials put pressure on the federal appeal court judge. They can always find some shady, illegal activities, in judge Jimmy Rayna, an Obama judge.
Has there ever been a “leader” of a non communist country that had more lemmings and spineless cadre?
They will just blame it on biden and the voters will believe him
The $800 de minimis exemption ended today. That cement my inflation forecast. Time to buy bonds.
So you are predicting no or low inflation?