Inflation Lower Than Expected in August
Inflation is moving closer to the Federal Reserve’s target (CNBC).
What’s going on: “The personal consumption expenditures price index, a measure the Fed focuses on to measure the cost of goods and services in the U.S. economy, rose 0.1% for the month, putting the 12-month inflation rate at 2.2%, down from 2.5% in July.”
- Economists surveyed by Dow Jones had anticipated the 12-month inflation rate would be 2.3%.
- The Federal Reserve has a target of 2% inflation.
The details: Core PCE—which excludes energy and food prices and is the measure more closely watched by the Federal Reserve—increased 0.1% last month and was up 2.7% from August 2023.
- Forecasts for core PCE have been 0.2% for August and 2.7% for the year.
Spending and income: Personal income rose 0.2% in August and spending increased 0.2%, both lower than expected.
What it means: The news—which comes a week after the Federal Reserve announced its first benchmark rate cut in four years—could “[ease] the way for future interest rate cuts.”