December 1, 2022
Inflation increased faster than expected in August

Inflation in August was stronger than expected despite efforts by the Federal Reserve to slash prices, with Friday’s data the central bank follows closely.

The personal consumption expenditure price index excluding food and energy rose 0.6% for the month after remaining flat in July. This was faster than the Dow Jones estimate of 0.5% and is another sign that inflation is on the rise.

On a year-over-year basis, core PCE grew by 4.9%, which exceeded estimates of 4.7% and exceeded last month’s 4.7%.

Headline PCE, including gas and energy, rose 0.3% in August, compared to a 0.1% decline in July. It also increased with a sharp drop in gas prices, which took the cost at the pump well below the nominal record of $5 per gallon earlier in the summer.

The Fed generally prefers the core PCE as a broad indicator of where prices are moving as it adjusts for consumer behavior. In terms of core or headline, Friday’s data from the Commerce Department showed inflation operating well above the central bank’s long-term target of 2%.

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