Consumer prices in the U.S. rose slightly in August, aligning with economist expectations, as reported by the Commerce Department on Friday.
The Commerce Department revealed its personal consumption expenditures (PCE) price index increased by 0.1 percent in August, following a 0.2 percent rise in July. This marginal rise, aligning with forecasts, resulted from a 0.2 percent increase in service prices, partly balanced by a 0.2 percent decrease in goods prices.
Additionally, the annual growth rate of the PCE price index decelerated to 2.2 percent in August from 2.5 percent in July, slightly below the predicted decrease to 2.3 percent. Year-over-year, goods prices declined by 0.9 percent, while service prices significantly rose by 3.7 percent.
Excluding food and energy, the core PCE price index also inched up by 0.1 percent in August after a 0.2 percent increase in July, though another 0.2 percent increase was anticipated. Concurrently, the annual growth rate of the core PCE price index accelerated to 2.7 percent in August from 2.6 percent in July, meeting expectations.
Quincy Krosby, Chief Global Strategist for LPL Financial, commented, "The August PCE report supports the Fed's decision for a significant rate change on September 18, though the 2.7% year-over-year core rating indicates another 50 basis points change needs thorough evaluation unless the labor market shows signs of weakness."
Krosby added, "Although the Fed cannot claim total victory over inflation, today's report – showing a 2.2% year-over-year headline – highlights that overall inflation is moving decisively in the right direction."
These inflation metrics, favored by the Federal Reserve, were part of the Commerce Department's report on personal income and spending.
The report indicated personal income rose by 0.2 percent in August after a 0.3 percent increase in July, falling short of the anticipated 0.4 percent increase. Disposable personal income, or personal income minus personal current taxes, increased by 0.2 percent for the third consecutive month.
Personal spending edged up by 0.2 percent in August, following a 0.5 percent rise in July, though a 0.3 percent rise was expected. Adjusted for price changes, personal spending increased by 0.1 percent in August after a 0.4 percent increase in July.
The report also noted a slight decrease in the personal saving rate, which edged down to 4.8 percent in August from 4.9 percent in July.
