:max_bytes(150000):strip_icc()/GettyImages-2225894290-720e44ddccc24991a28d337703e1cf76.jpg "The Fed’s Favorite Inflation Measure Stayed Stubbornly High In August")
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Key Takeaways
- Consumer prices rose 2.7% over the year in August as measured by PCE inflation, up from 2.6% in July, while “core” prices excluding food and energy rose 2.9%, the same as in July.
- Prices are increasing faster than the Federal Reserve’s goal of a 2% annual rate.
- The uptick was not surprisingly high, so the Fed likely remains on track to continue cutting its key interest rate despite inflation concerns.
There’s still no sign that inflation is headed down towards the Federal Reserve’s goal of a 2% annual rate.
Consumer prices as measured by the Personal Consumption Expenditures price index, rose 2.7% over the year in August, up from a 2.6% annual increase in July, the Bureau of Economic Analysis said Friday. “Core” PCE prices, which exclude volatile prices for food and energy, rose 2.9% over the year, the same as in July. Policymakers and economists closely watch “core” prices because they are a better indicator of broad inflation trends.
The increase matched the expectations of forecasters, and the lack of a surprise inflation surge likely kept expectations in financial markets intact that the Fed will cut its key interest rate in October for the second time this year despite concerns that inflation is still higher than the central bank’s target. President Donald Trump’s tariffs are pushing up prices as merchants pass the cost of the import taxes on to consumers, economists have said.
This story is breaking news and will be updated with further information.
