U.S. inflation measured by the Federal Reserve’s preferred price gauge held at 3.4% in August, while monthly price growth came in slightly below expectations, according to data from the U.S. Bureau of Economic Analysis.
The Personal Consumption Expenditures price index rose 0.3% from July, accelerating from a downwardly revised 0.1% increase in the previous month but below market expectations for a 0.4% gain.
On an annual basis, headline PCE inflation remained at 3.4%, unchanged from July’s downwardly revised reading.
Energy Prices Drive Goods Inflation Higher
Goods prices increased 0.3% in August, reversing a 0.1% decline in July.
The increase was concentrated in nondurable goods, where prices rose 0.5%. Gasoline and other energy goods jumped 4.4%, adding pressure to the monthly inflation reading.
Durable goods prices increased a more moderate 0.1%, slowing from a 0.4% rise in July.
Services inflation also accelerated, rising 0.3% after a 0.1% increase in July. Transportation services climbed 1.4%, while food services and accommodation prices increased 0.5%.
Core Inflation Comes in Below Forecasts
The core PCE price index, which excludes volatile food and energy prices, rose 0.2% month over month, below expectations for a 0.3% increase.
On a 12-month basis, core PCE inflation remained at 3.0%.
The difference between headline and core inflation highlights the role energy prices played during August. While gasoline contributed to stronger overall price growth, the underlying measure monitored closely by policymakers showed a more moderate monthly increase.
The PCE price index is a key measure used by the Federal Reserve to assess inflation trends. With both headline and core inflation remaining above the central bank’s 2% target, the latest figures add to the economic data policymakers will consider when assessing the path of interest rates.
