Fed's favored inflation gauge climbs slightly in August

"The Commerce Department reported Friday that its personal consumption expenditures (PCE) price index was up 2.7% in August from a year earlier, a tick higher from a 2.6% year-over-year increase in July and most since February. Excluding volatile food and energy prices, so-called core PCE inflation showed a 2.9% increase in prices from August 2024, the same as in July. The increases were what forecasters had expected."

"Separately, the report showed that inflation-adjusted consumer spending rose a healthy 0.4% from July, same as the month before, largely on a 0.7% increase in spending for goods; spending on services such as travel and dining out rose just 0.2%. "The resilience of the US consumer was on show once again," Michael Pearce of Oxford Economics wrote, though he cautioned that spending "is being driven by households at the top of the income distribution." Incomes rose 0.4%, same as the month before inflation. Income for the self-employed and business owners rose 0.9% for the second straight month. Wages and salaries rose 0.3% from July, dipping from a 0.5% increase the month before."

PCE inflation accelerated to 2.7% year-over-year in August, while core PCE excluding food and energy remained at 2.9% year-over-year. Monthly prices rose 0.3% overall, with core monthly prices up 0.2%. Inflation-adjusted consumer spending increased 0.4% from July, driven by a 0.7% rise in goods spending and a 0.2% rise in services. Income growth matched spending gains at 0.4% monthly; self-employed and business owner income rose 0.9% for the second month. Wages and salaries rose 0.3% month-to-month, down from 0.5% the prior month. Annual inflation stays above the Fed's 2% target despite recent rate moves.

Read at Fast Company