A key inflation indicator rose 3.6 percent in August from last year, slightly topping economists’ expectations and matching the prior months price increases as costs continued to build in the US economy, the feds said Friday.
Economists surveyed by Dow Jones were expecting to see 3.5 percent year-over-year increase in the Commerce Department’s core personal consumption expenditures index.
The core index, which excludes volatile food and energy costs, slightly topped those expectations and held steady at the year-over-year increase reported for July, which was the biggest annual jump in 30 years.
The core index rose 0.3 percent from July, also matching the prior month’s increase, the Commerce Department reported.
The index tracks prices across a variety of goods and services and is considered a broader measure for inflation than the Labor Department’s Consumer Price Index, which rose 5.3 percent in August from a year ago.
The core PCE index is the Federal Reserve’s preferred measure against its 2 percent inflation target. Last week, the Fed raised its core CPE inflation projection for the year to 3.7 percent, up from 3 percent it estimated in June.
Including food and energy, the Commerce Department’s index jumped 4.3 percent from a year ago, up from 4.2 percent in July and the highest reading since 1991.
That figure was up 0.4 percent from July to August, the report said.
Even as prices rose, consumer spending also surged more than expected, the Commerce Department added.
Consumer spending, which accounts for more than two-thirds of US economic activity, rebounded 0.8 percent in August after dipping 0.1 percent in July, according to revised figures released Friday.
Economists polled by Reuters had expected to see spending rise just 0.6 percent for the month.
The overall increase in spending came despite a decrease in purchases of cars and auto parts, the feds said, as those sectors are hammered by an ongoing shortage of semiconductor chips that have forced automakers to hike prices substantially.
Spending on meals, hotels and airline tickets also dropped as COVID-19 cases rose this summer due to the Delta variant.
Personal income increased 0.2 percent in August, after surging 1.1 percent in July thanks in part to government-enhanced tax breaks for parents.
The rise in income reflected recent wage growth for many Americans amid the nationwide labor shortage, as well as the monthly Child Tax Credit payments, the Commerce Department said.
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