Price pressures moderated slightly on a headline basis but remain above the Federal Reserve’s 2% target
U.S. inflation as measured by the personal consumption expenditures price index edged lower to 2.8% on an annual basis in January 2026, down from 2.9% in December, according to data published Friday by the Bureau of Economic Analysis. On a monthly basis, the PCE price index rose 0.3%, a slight deceleration from the 0.4% increase recorded in December.
The core PCE price index, which excludes food and energy and is closely watched by the Federal Reserve as it conducts monetary policy, rose 0.4% from the prior month and 3.1% from a year earlier, unchanged from the prior month’s annual reading and in line with economist forecasts compiled by Dow Jones.
The next Federal Open Market Committee meeting, in which interest rate cuts will be discussed, will be held on March 18. Economists have pushed back their expectations for a rate cut from March to June, expecting two quarter-point reductions by year end.
The next PCE release, covering February 2026 data, is scheduled for April 9.
View the full report here: https://www.bea.gov/news/2026/personal-income-and-outlays-january-2026