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 2004, now 2.60%.
- Core PCE bottomed at 2.63% in June 2004 (2.61% April 2005), now 2.88%
- CPI bottomed at 2.44% in September 2004, now 2.70%.
- Core CPI bottomed at 2.79% in March 2004, 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
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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.
