Fed’s Favored Inflation Gauge Accelerates Slightly in August

The Federal Reserve’s favored inflation gauge accelerated slightly in August from a year earlier.

The Commerce Department reported that its personal consumption expenditures (PCE) price index rose 2.7% from a year ago, up from 2.6% in July and the highest since February, Paul Wiseman reported for the Associated Press (AP).

Inflation-adjusted consumer spending grew a healthy 0.4% for the second month in a row, boosted by a 0.7% rise in goods spending.

Excluding volatile food and energy prices, core PCE inflation increased 2.9% in August, the same as in July, matching forecasts.

Prices rose 0.3% from July, compared with a 0.2% increase the month before, while core prices rose 0.2%, unchanged from July.

Inflation-adjusted consumer spending grew a healthy 0.4% for the second month in a row, boosted by a 0.7% rise in goods spending, while services spending, including travel and dining out, gained just 0.2%.

“The resilience of the U.S. 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% for the second straight month, while income for the self-employed and business owners climbed 0.9%. Wages and salaries rose 0.3%, down from 0.5% in July.