Fed’s preferred measure of inflation dips to 3.4 percent in August
The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, fell to 3.4 percent year-over-year in August. Core inflation dropped to 3.0 percent, a reading that was lighter than expected. The index rose 0.3 percent from July to August. This cooling trend reduces the urgency for additional interest rate hikes. However, some data indicates inflation remained stubborn due to the Iran war, and the Bureau of Economic Analysis updated its methodology for measuring software and legal services prices, which contributed to the improvement.
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- ✓ The Federal Reserve's preferred measure of inflation dipped to 3.4 percent in August.
- ✓ Core inflation for August was 3.0 percent.
- ✓ The PCE price index rose 0.3 percent between July and August.
- ✓ Consumer confidence fell to 81.9 in September, the lowest level since 2014.
What changed
August PCE inflation data showed a decline to 3.4 percent headline and 3.0 percent core inflation.
Live updates
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US August PCE Inflation Dips to 3.4 Percent
The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, fell to 3.4 percent year-over-year in August. Core inflation dropped to 3.0 percent, a reading that was lighter than expected. The index rose 0.3 percent from July to August. This cooling trend reduces the urgency for additional interest rate hikes. However, some data indicates inflation remained stubborn due to the Iran war, and the Bureau of Economic Analysis updated its methodology for measuring software and legal services prices, which contributed to the improvement.
Why it matters
The PCE index is the primary tool the Fed uses to determine monetary policy and interest rate adjustments. Lower inflation readings provide policymakers more flexibility to pause rate hikes. Consumer confidence has simultaneously fallen to a 12-year low of 81.9 in September.
What is confirmed
- The Federal Reserve's preferred measure of inflation dipped to 3.4 percent in August.
- Core inflation for August was 3.0 percent.
- The PCE price index rose 0.3 percent between July and August.
- Consumer confidence fell to 81.9 in September, the lowest level since 2014.
Still unconfirmed
- The Iran war continued to lift prices and keep US inflation stubborn last month.
- The cooling inflation reading could buy Donald Trump and the Fed time on another rate hike.
What to watch next
- Federal Reserve decisions on future interest rate hikes
- Further updates on the impact of the Iran war on consumer prices
confidence 90%Sources used for this update (14)
- CNBC — Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected
- Politico — Cooler inflation could buy the Fed, Trump time on another rate hike
- cnn.com — US inflation remained stubborn last month as Iran war continued to lift prices
- Reuters — COMMENTARY: Trading Day: Shrugging off a volatile September, markets shuffle into Q4
- Yahoo Finance — A cooler-than-expected reading on Fed’s favored inflation measure tamps down on urgency for rate hikes
- The Hill — Fed’s preferred measure of inflation dips to 3.4 percent in August
- finance.yahoo.com — PCE inflation eases to 3.4% — cooling the case for another ...
- www.techtimes.com — August PCE Inflation Cooled to 3.4%: BEA Rewrote How It ...
- www.gulf-times.com — tag - Gulf Times
- www.10news.com — Consumer confidence hits 12-year low as prices squeeze just before midterms - ABC 10News San Diego
- www.conference-board.org — US Consumer Confidence
- digg.com — US core PCE inflation came in at 3.0% in August, below expectations · Digg
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