Finance · Hometown Post
Inflation remained stubbornly elevated in August as a war-driven energy shock continued to ripple through the US economy and Americans’ pocketbooks. The Personal Consumption Expenditures price index – the Federal Reserve’s preferred inflation gauge – rose 0.3% from July, bringing the annual rate to 3.4%, unchanged from the month before, according to new data from the Commerce Department. Inflation picked up on a monthly basis as fuel and other energy prices shot higher as a result of the war in Iran.
Excluding volatile food and energy prices, the closely watched core PCE price index rose 0.2% from July, staying at an annual rate of 3% for a third-straight month. Despite stubborn inflation, a crucial economic engine continued to run smoothly: Inflation-adjusted spending was up 0.6% in August, the strongest monthly increase in more than a year. While consumer spending has remained resilient, Americans have been drawing down their reserves in the process.
The saving rate (savings as a percentage of after-tax income) dropped to 4.1% in August, a nearly four-year low. The August report was expected to show some cooling in inflation because of some methodological changes the Commerce Department made to several key categories. Every year, the Bureau of Economic Analysis updates its massive repository of national, industry and regional data to incorporate newly available statistics and more accurately capture changes in prices.
Economists estimate that the changes could lower the annual PCE inflation rate by a couple of percentage points. This story is developing and will be updated.
Source: CNN
