Consumer Spending Increased in August Despite Persistent Inflation

The report indicated that the Personal Consumption Expenditures (PCE) price index, a key measure for inflation, increased by 0.31% from July to August. Core PCE inflation, which excludes food and energy prices, saw a rise of 0.25% in August.

Over the past year, the headline PCE inflation rate reached 3.42%, while core PCE inflation registered at 3.01%. Despite these inflationary pressures, consumer spending rose, with inflation-adjusted personal consumption expenditures increasing by 0.55%, amounting to approximately $92.82 billion.

Much of this increase was driven by spending on goods, which rose by 1.33% or $76.44 billion. Spending on services also saw a marginal increase of 0.20%, translating to $22.27 billion. Within the goods category, durable goods spending increased by 1.93%, while nondurable goods increased by 1.02%.

Several major household expenditure categories experienced growth in August. Spending on gasoline and other energy goods climbed by 4.32% from July and by 23.55% compared to August 2025. Expenditures on motor vehicles and parts rose by 2.53%, and transportation services increased by 1.66%.

Housing and utilities constituted one of the largest household spending categories, accounting for about $4 trillion in annual spending, a 4.51% year-over-year increase. Health care expenditures also grew, reaching approximately $3.86 trillion, marking a 6.76% annual increase.

In contrast, the personal savings rate fell by 0.5 percentage points to 4.1%. Although personal income rose by 0.24%, or about $66.65 billion, real disposable personal income per capita declined by 0.05%, indicating a slight decrease in inflation-adjusted after-tax income.

Additionally, the JEC released its third estimate of second-quarter gross domestic product (GDP), indicating a 2.22% annualized inflation-adjusted growth rate, an upward revision of 0.74 percentage points from previous estimates. Current-dollar GDP increased at an annualized rate of 8.49%, totaling approximately $32.56 trillion for the second quarter, a rise of $656.8 billion from the first quarter.

Consumer spending was a significant contributor to economic growth during this period, contributing approximately 2.5 percentage points to real GDP growth. Nonresidential fixed investment added another 1.2 percentage points, although changes in private inventories and net exports reduced overall growth by about 0.5 and 1.1 percentage points, respectively. The updated figures illustrate that consumer spending has supported economic activity through the second quarter and into August, despite ongoing elevated inflation and a decline in savings rates.