One of the US Fed’s favoured measures of inflation is the change in the core personal consumption expenditures (PCE) price index. The core version strips out energy and food components, which are volatile from month to month, in an attempt to identify the prevailing trend. It’s not the only measure of inflation used; the Fed also tracks the Consumer Price Index (CPI) and Producer Price Index (PPI) from the Department of Labor.
The latest figures have been published by the Bureau of Economic Analysis as part of the August personal income and expenditures report. At +0.0% for the month, core PCE inflation was down from July’s revised +0.2% but in line with expectations.
US financial markets let the figures pass without much comment and bond yields reacted in a somewhat inconsistent fashion. 2-year Treasury bond yields fell by 3bps to 2.80% but 10-year yields inched up 1bp to 3.06% and 30-year yields added 3bps to 3.21%. The US dollar was stronger against other major currencies.