Fed inflation gauge to show persistent price pressures as rate hike odds rise

The Federal Reserve's primary inflation measure, the personal consumption expenditures price index, is expected to show persistent price pressures when released Wednesday, with core inflation remaining well above the central bank's 2% target and offering little justification to pause interest rate hikes. The Dow Jones consensus forecasts monthly increases of 0.3% for both all-items and core prices, with annual rates of 3.7% and 3.3%, unchanged from July. Fed officials, including Governor Michael Barr, indicate further rate increases are likely needed, as consumer spending remains robust despite elevated prices. The Bureau of Economic Analysis will apply retroactive methodology revisions that may lower prior monthly readings, potentially reducing July's annual figure to around 3%. However, economists expect near-term data to remain unfavorable, with markets pricing in a strong probability of an October rate hike.