PCE inflation report today: what it measures and why it matters

This morning the government released the Personal Consumption Expenditures price index for August, usually shortened to PCE. It came out at 8:30 a.m. Eastern, which was 5:30 a.m. Pacific. If you hear it on the news today, it is worth knowing what it is.

PCE tracks how much the prices of goods and services people buy are changing. It is the inflation gauge the Federal Reserve prefers when it decides where to set interest rates. The "core" number leaves out food and energy, which jump around, so it shows the underlying trend. Ahead of the release, forecasts reported by TheStreet called for 3.7% headline and 3.3% core inflation over the past year.

The report lands at a tense moment for borrowing costs. Long-term Treasury yields have reached levels not seen in years, with the 30-year yield crossing 5.6% for the first time since 2002. Mortgage rates tend to follow those yields, and the average 30-year mortgage rate cited this week was 7.30%, up from 7.12%.

For most households the practical effect is on loans. A higher inflation reading makes it less likely that rates come down soon. If you are shopping for a home, a car or a personal loan, it helps to compare several lenders and ask how long a quoted rate can be locked. If you carry a credit card balance, paying it down is one of the few moves that gets more valuable as rates rise.

Today's takeaway is simple. Look up the actual PCE figure in a reputable news report, and if you have a variable-rate debt, check what rate you are paying this month.