By
Joel South
Sep 26, 2025 | Updated 9:14 AM ET
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Key Points
- The Commerce Department issued its PCE report for August, showing small rises in core and total inflation.
- Personal income continues to rise slower than the prices for the things people buy.
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A slow week with little important economic news (other than yesterday’s Bureau of Labor Statistics report on falling first-time unemployment filings) got busy in a hurry on Friday, with the U.S. Commerce Department revealing the personal consumption expenditures price index (PCE) increased 0.3% in August. The new data clocks the annual U.S. inflation rate at 2.7%.
Volatile food and energy prices, once excluded to give a “core” inflation rate, rose 0.2% to 2.9%.
All of the above numbers were in line with economists’ predictions.
Actual personal consumption expenditures, meanwhile, grew 0.6%, while the personal income that makes those expenditures possible increased only 0.4%. Both numbers were slightly (0.1%) higher than predicted. Combined, they imply consumers continue to be stressed, with prices rising faster than incomes. Still, the changes weren’t large enough to cause great fear in the market, or upset expectations that the Federal Reserve will continue cutting interest rates (and boosting the stock market).
Result: the Vanguard S&P 500 ETF (NYSEMKT: VOO) is up 0.3% premarket Friday.
Tariffs News
What may have a bigger effect is the latest tariffs news. Specifically, last night President Trump announced he will be imposing 100% tariffs on branded or patented pharmaceutical imports from manufacturers that are not building factories in the U.S. Those italics are important, however. Nine out of 10 pharmaceuticals imported into the U.S. are unpatented generics, for example, and so will not be hit with higher tariffs. Also, multiple foreign pharmaceutical companies are actively building manufacturing capacity in the U.S., allowing them, too, to do an end-run around the new tariffs.
Mr. Trump also announced a 25% tariff on imported “heavy” trucks (think semis, not F150s).
Finally, the President announced a 30% tariff on imported upholstered furniture, as well as certain other home goods.
All three of these new tariffs categories are set to go into effect October 1.