Fed's favored inflation gauge remained stubbornly high in January as consumer price pressures persist

This story on the January 2026 PCE inflation report is developing and will be updated with more details.

The Federal Reserve's preferred inflation gauge remained stubbornly high in January as consumers continued to face elevated price growth.

The Commerce Department on Friday reported that the personal consumption expenditures (PCE) index rose 0.3% on a monthly basis in January and is up 2.8% from a year ago. The monthly figure was in-line with the expectations of economists polled by LSEG, while the annual figure was slightly lower than the 2.9% estimate.

Core PCE, which excludes volatile measurements of food and energy prices, was up 0.4% from a month ago and increased 3.1% year over year. Both figures were in line with economists' expectations from the LSEG poll.

Federal Reserve policymakers are focusing on the PCE headline figure as they try to bring inflation back to their long-run target of 2%, though they view core data as a better indicator of inflation. Compared with December's readings, headline PCE inflation declined slightly from 2.9% while core PCE rose from 3%.

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Prices for goods were up 1.3% in January on an annual basis, down from 1.7% in December. Goods prices increases were even lower last summer, when the index posted annual gains of 0.6% in June and July and 0.9% in August.

Durable goods prices increased 2.2% in January from a year ago, up from a 2.1% reading in December. The index was close to 1% from June through November. Nondurable goods prices rose just 0.8% in January, a decline from the 1.6% annual rate recorded in December and the lowest reading since August.

Services prices were up 3.5% from a year ago in January. That's up slightly from the 3.4% services inflation rate that persisted from September through December.

The personal savings rate as a percentage of disposable personal income was 4.5% in January. That represents an increase from the 4% savings rate that prevailed from October through December, and is also the highest reading for the index since it was last at 4.5% in July.