The core PCE price index rose 3.1% over the 12 months through September 2026, the Bureau of Economic Analysis reported on October 29. The measure strips out food and energy and serves as the Federal Reserve’s preferred inflation gauge. It had run at 3.0% in August. The release landed one day after the Federal Open Market Committee voted 10 to 2 to hold the federal funds target range at 3.75% to 4.00%, a decision that left the U.S. prime rate at 7.00%. Governors Lisa D. Cook and Beth M. Hammack dissented, preferring a quarter-point increase at that meeting.
The September print cuts both ways for the Committee. Headline PCE inflation accelerated to 3.6% from 3.4% in August, and prices rose 0.5% on the month. Core inflation at 3.1%, however, sits three tenths of a point below the 3.4% median that Fed officials themselves projected for 2026 in their September Summary of Economic Projections. Over the three months through September, core PCE ran at a 2.9% annual rate. The data arrive with roughly six weeks until the Committee meets again on December 8 and 9, the last scheduled decision of 2026.
- Core PCE inflation rose to 3.1% in September from 3.0% in August, the BEA reported October 29.
- Headline PCE inflation reached 3.6% over 12 months, with prices up 0.5% on the month.
- The 3.1% core reading sits below the 3.4% median Fed officials projected for 2026 in September.
- Real disposable income fell 0.3% and the personal saving rate slipped to 3.8%.
- The prime rate holds at 7.00% until the Committee’s next decision on December 9.
What the September PCE Report Showed
The Bureau of Economic Analysis published Personal Income and Outlays for September 2026 on October 29 under release number BEA 26-46. Personal income increased $54.5 billion, or 0.2% at a monthly rate. Disposable personal income rose $52.7 billion, also 0.2%. Personal consumption expenditures climbed $113.1 billion, or 0.5%, more than twice the pace of income. Services accounted for $78.1 billion of that increase and goods for $35.1 billion. The PCE price index rose 0.5% from August and 3.6% from September 2025. Excluding food and energy, prices rose 0.3% on the month and 3.1% from a year earlier.
The distance between spending and income shows up in two figures the Committee watches closely. Real disposable personal income, which adjusts for price changes, fell 0.3% in September. Real personal consumption expenditures rose just $2.6 billion, less than 0.1% at a monthly rate. Households covered the difference out of savings. Personal saving totaled $911.1 billion and the saving rate fell to 3.8% of disposable income. Nominal spending growing 0.5% while real spending barely moved describes a month in which households paid more and carried home close to the same amount. The next reading, covering October, publishes November 25.
Why 3.1% Runs Below the Fed’s Own Forecast
Fed officials published their most recent Summary of Economic Projections on September 16. The median participant projected core PCE inflation of 3.4% for 2026 and 2.5% for 2027, with headline PCE inflation of 3.7% for 2026. Both 2026 medians had moved up from the June round, which carried 3.3% for core and 3.6% for headline. September’s actual core reading of 3.1% therefore runs three tenths of a percentage point under what the median official expected the full year to deliver, and the 3.6% headline figure runs one tenth under the 3.7% projection.
Shorter windows read cooler still. Federal Reserve Bank of St. Louis data put the core index at 130.902 in September against 129.969 in June, a 2.9% annual rate across three months. The quarterly accounts say something similar. In the advance estimate of third-quarter gross domestic product, also released October 29, the PCE price index rose at a 2.1% annual rate and the core index at 2.5%, down from 5.0% and 3.3% in the second quarter. Real GDP grew at a 3.4% annual rate. The October 28 statement described economic activity as expanding at a strong pace while holding that inflation remains elevated, and the two dissenting votes rested on that second clause.
What Bond Yields Said About a December Hike
Treasury yields carry the clearest market read on what the September data mean for December. The two-year note, the maturity most sensitive to the expected path of policy, yielded 4.61% on October 29. The effective federal funds rate stood at 3.88% that same day. A spread of 73 basis points implies traders expect the target range to end up higher over the life of that note rather than hold at 3.75% to 4.00%. The 10-year note yielded 4.98% and the 30-year bond 5.32%.
The shape of the curve adds a second signal. The spread between the 10-year and 2-year yields stood at 0.38 percentage point on October 30, a positive slope that has held while short rates climbed. Secured overnight financing settled at 3.94% on October 29, six basis points above the effective funds rate. The Fed’s balance sheet stood at $6.75 trillion on October 28 and reserve balances at $2.89 trillion. None of those readings moved far on the PCE release itself, which suggests the print confirmed what traders already assumed rather than resetting it. Two hard data points remain before the December meeting: October CPI on November 10 and October PCE on November 25.
What Changes for Your Money
Nothing in the September PCE report changes a consumer rate by itself. The prime rate moves when the Committee moves its target range, and the Committee did not move it on October 28. The Federal Reserve’s H.15 release, dated October 30, carried the bank prime loan rate at 7.00% for every business day from October 23 through October 29. Credit card APRs, home equity lines of credit, and most variable-rate personal loans are priced as prime plus a margin, so they hold where they are until the next change. Our guide to how Fed decisions reach your loans walks through that transmission.
Fixed borrowing costs answer to the Treasury curve rather than to prime. With the 10-year note at 4.98%, pricing stays anchored near the levels on our current mortgage rates page. Savers sit on the other side of the same arithmetic: a target range held at 3.75% to 4.00% keeps short deposit yields steady, which supports the APYs tracked on our best high-yield savings accounts and best CD rates pages. The September figure most relevant to a household budget may be neither 3.1% nor 3.6%. Real disposable income fell 0.3% and the saving rate dropped to 3.8%, which means purchasing power slipped even as nominal paychecks grew.
Three dates decide whether the prime rate ends 2026 at 7.00%. October CPI publishes November 10, October PCE publishes November 25, and the Committee announces its decision on December 9. Track the core PCE 12-month rate against the Fed’s own 3.4% projection for the year. Readings at or under 3.1% strengthen the case the majority made on October 28. Readings above 3.4% strengthen the case Cook and Hammack made.
Frequently Asked Questions
What is the latest core PCE inflation rate?
Core PCE inflation ran at 3.1% over the 12 months through September 2026, according to the Bureau of Economic Analysis release published October 29. On a monthly basis the core index rose 0.3%. The measure excludes food and energy and is the Federal Reserve’s preferred inflation gauge.
What is the inflation rate right now?
Two official measures give different answers for September 2026. The PCE price index, published by the Bureau of Economic Analysis, rose 3.6% over 12 months. The Consumer Price Index, published by the Bureau of Labor Statistics on October 14, rose 3.7% over 12 months. Both accelerated from their August readings. The Federal Reserve targets 2% annual inflation measured by PCE, so September sits 1.6 percentage points above that goal. The next CPI report publishes November 10 and the next PCE report publishes November 25.
What is today’s CPI inflation rate?
The Consumer Price Index rose 3.7% over the 12 months ending September 2026, the Bureau of Labor Statistics reported on October 14 in release USDL-26-1574. On a seasonally adjusted monthly basis the all items index rose 0.6%, after a 0.4% rise in August. Core CPI, which excludes food and energy, rose 0.3% on the month and 2.6% over 12 months, up from 2.4% in the year through August. The October CPI release is scheduled for November 10 at 8:30 a.m. Eastern time.
Why is core CPI lower than core PCE?
Core CPI ran at 2.6% over the 12 months through September while core PCE ran at 3.1%, a gap of half a percentage point. The two indexes are built differently. The Consumer Price Index tracks out of pocket spending by urban consumers against a fixed basket. The PCE price index covers a broader measure of household consumption and reweights its basket more often, so identical price moves land with different force. The Federal Reserve sets its 2% target on PCE, which is why the 3.1% figure carries more weight in December.
Will the Fed raise rates in December because of this report?
The Committee has not said. Its October 28 statement held the target range at 3.75% to 4.00% on a 10 to 2 vote and said the accumulation of more information will help determine the appropriate policy stance. Lisa D. Cook and Beth M. Hammack dissented, preferring a quarter-point increase at that meeting. The bond market leans toward tightening: the two-year Treasury note yielded 4.61% on October 29 against an effective funds rate of 3.88%, a gap of 73 basis points. The decision comes on December 9.
What does 3.1% core PCE mean for my credit card APR?
Nothing changes until the Committee changes its target range. Credit card APRs are set as the prime rate plus a margin, and prime stood at 7.00% through October 29 on the Federal Reserve’s H.15 release. A quarter-point increase in December would lift prime to 7.25% and add about the same quarter point to most variable card APRs within one or two billing cycles. A hold leaves your APR where it is. Paying down a balance before a possible increase costs less than carrying it into one.
Watching the Two Reports Before December 9
Two scheduled releases stand between the September data and the Committee’s final decision of 2026. The Bureau of Labor Statistics publishes October CPI on November 10. The Bureau of Economic Analysis publishes October personal income and outlays, core PCE included, on November 25. The Committee then meets December 8 and 9. Current readings for prime, inflation, and the policy path are maintained on our current prime rate, inflation tracker, and Fed meeting schedule pages.
References
- Bureau of Economic Analysis. “Personal Income and Outlays, September 2026.” BEA 26-46, October 29, 2026. bea.gov
- Bureau of Economic Analysis. “GDP (Advance Estimate), 3rd Quarter 2026.” BEA 26-45, October 29, 2026. bea.gov
- Board of Governors of the Federal Reserve System. “FOMC Statement,” October 28, 2026. federalreserve.gov
- Board of Governors of the Federal Reserve System. “Summary of Economic Projections,” September 16, 2026. federalreserve.gov
- Board of Governors of the Federal Reserve System. “H.15 Selected Interest Rates,” October 30, 2026. federalreserve.gov
- Bureau of Labor Statistics. “Consumer Price Index, September 2026.” USDL-26-1574, October 14, 2026. bls.gov
- Federal Reserve Bank of St. Louis. “Core PCE Price Index (PCEPILFE),” FRED. fred.stlouisfed.org
