August Inflation Report Will Include New Calculation Methods
The Bureau of Economic Analysis will update its PCE inflation data on September 30, 2026, to improve accuracy in specific service sectors.
Updated on Sept. 28, 2026 in Inflation
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The Bureau of Economic Analysis will publish the August Personal Consumption Expenditures (PCE) Price Index on September 30, 2026, alongside a methodological overhaul. This update incorporates new data from federal budgets, IRS records, and the Census Bureau to better reflect pricing trends in sectors like software and legal services.
Why it matters
Policymakers rely on the PCE index because it provides a broader, more frequent view of inflation than the Consumer Price Index. The update aims to remove distortions in service-sector pricing, potentially providing a more precise picture of how household costs are evolving.
The Cleveland Fed projects annual headline inflation to reach 3.8 percent for August, up from 3.7 percent in July. While annual core inflation was previously 3.3 percent, the new methodology could reduce that figure by as much as 40 basis points, potentially slowing the rate to 2.9 percent.
The players
Bureau of Economic Analysis
The federal agency responsible for producing and maintaining official inflation and economic data used by households and policymakers.
Federal Reserve
The central banking system that sets interest rates based on economic data to influence household borrowing costs and inflation.
Cleveland Fed
A regional reserve bank that provides independent inflation forecasts and economic analysis.
The details
The Bureau of Economic Analysis is adjusting how it tracks sectors including computer software, legal services, and portfolio management. By incorporating IRS income data and federal budget numbers, the agency intends to better capture price fluctuations. These changes will be applied retroactively to data going back to the first quarter of 2021 to ensure consistency.
Timeline
Q1 2021: The retroactive start date for the updated PCE methodology.
September 2026: The Federal Reserve implemented a quarter-point interest rate increase.
September 30, 2026: The Bureau of Economic Analysis publishes the August PCE data and methodology update.
October 2026: The next Federal Reserve policy meeting.
Money Landscape
The upcoming release marks a structural shift in how the Personal Consumption Expenditures Price Index tracks service costs. This data remains a primary indicator used by the Federal Reserve to gauge the inflation cycle and inform future interest rate decisions.
Changes to inflation calculations can influence how policymakers adjust interest rates, which directly affects borrowing costs for mortgages, auto loans, and credit cards. Households should review these reports as indicators of the broader interest-rate environment and consult a financial professional regarding debt strategy.
The takeaway
Reliable inflation data is essential for understanding the direction of interest rates and household purchasing power. Watch the September 30, 2026, release for the updated figures and consult with a financial professional about how interest rate shifts might impact your long-term debt and savings goals.
What happens next
The Federal Reserve is scheduled to hold its next policy meeting in October 2026.
Further reading
For more insight into how cost-of-living data is measured, visit the Inflation section.
Live Poll
Will the upcoming inflation data cause the Federal Reserve to pause interest rate hikes?
