US Personal Consumption Expenditures (PCE) prices rose 5.3% quarter-over-quarter in the second quarter of 2025, exceeding the 5.1% market forecast and accelerating from 4.8% in the previous quarter, according to Bureau of Economic Analysis data released as of August 2025. Core PCE, which excludes volatile food and energy prices, increased 4.9% quarter-over-quarter, up from 4.5% in the first quarter, suggesting that inflationary pressure is broadening beyond supply-side shocks. Energy and housing costs remained significant contributors, while resilient consumer demand and a tight labor market have allowed businesses to pass on higher input costs. Inflation has remained above the Federal Reserve's 2% target for more than two years. Treasury yields edged higher and equity futures trimmed gains after the release, while the market-implied probability of a September rate cut fell from 70% to around 55%, according to CME FedWatch. The stronger reading reinforces policymakers' need for "greater confidence" that inflation is moving sustainably lower. Upcoming employment and consumer spending data will help shape the Federal Reserve's September meeting, with some analysts expecting rates to remain elevated until late 2025 or early 2026. Persistently high inflation continues to pressure household purchasing power and housing affordability, while influencing bond yields, equity valuations and sector performance.