Key Fed inflation gauge accelerated again in August as high prices persist
Federal Reserve Bank of Chicago President Austan Goolsbee provides insight on the state of the U.S. economy on 'Making Money.'
An inflation measure closely watched by the Federal Reserve ticked higher in August as steep prices continue to squeeze millions of U.S. households.
The personal consumption expenditures (PCE) index showed that consumer prices rose 0.4% from the previous month, according to the Labor Department. On an annual basis, prices climbed 3.5% — up from 3.3% recorded the previous month, underscoring the challenge of taming high inflation.
The figures were both in line with estimates from Refintiv economists.
COMMERCIAL REAL ESTATE CRASH STILL LOOMING OVER US ECONOMY
A man shops for meat at a Safeway grocery store in Annapolis, Maryland, on May 16, 2022, as Americans brace for summer sticker shock as inflation continues to grow. (JIM WATSON/AFP via Getty Images / Getty Images)
In a sign the Fed's fight against inflation is making progress, core prices — which strip out the more volatile measurements of food and energy — climbed 0.1% from the previous month and 3.9% from the previous year. It marked the best reading for core inflation since 2021.
While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously told reporters that core data is actually a better indicator of inflation. Still, both the core and headline numbers point to inflation that continues to run above the Fed's preferred 2% target.
«The untangling of the sticky inflation embedded deep in the core remains, at 3.9% — but thankfully finally below 4% — still decidedly above the Fed's 2% target for delivering ‘price stability,'» said Quincy Krosby, chief global
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