Softer US Inflation and the Energy Squeeze on Spending Power

While US core PCE inflation was softer than expected at 0.2% MoM, consumers are increasingly squeezed by energy costs, leading to falling disposable incomes and a record low savings rate of 2.6%.

Key Takeaways

• 1.Core PCE inflation rose 0.2% MoM, softer than the 0.3% expected, but still too high for a Fed pivot.
• 2.Real household disposable income has fallen for three consecutive months, hitting its lowest level since February 2025.
• 3.The household saving ratio dropped sharply to 2.6%, well below the 6% historical average.

Table of Contents

• Softer US inflation, but the energy squeeze on spending power is becoming obvious
• Core PCE deflator metrics (MoM%, 3M annualised & YoY%)
• Real Household Disposable Income (2017 $bn)
• Author
• Disclaimer

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