US Fed's inflation indicator softens to 3.9% in August, from 4.3% in July

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve's preferred inflation indicator softened in August both annually and monthly, according to Commerce Department figures released Friday.

The core personal consumption expenditures (PCE) price index rose 3.9% annually in August, down from the revised 4.3% year-on-year gain in July, and came in line with market expectations.

The index rose 0.1% in August, after a 0.2% monthly increase in July, also coming in line with estimates.

On a monthly basis, food prices increased 0.2%, but energy prices jumped 6.1% due to recent increase in crude oil prices, according to the figures.

Annually, food prices were up 3.1%, but energy prices were down 3.6% in August, compared to the same month of last year.

The PCE price index, which includes food and energy prices, rose 3.5% in August, following a revised 3.4% year-on-year gain in July, coming in line with market estimates.

The index rose 0.4% in August, following a 0.2% month-on-month gain in July, also in line with market expectations.

The Fed has made a total of 11 interest rate increases since March 2022 to tame record inflation, carrying the federal funds rate to 5.25%-5.5% target range -- the highest in 22 years.

Although the bank shipped two rate hikes this year, it expects an additional hike in one of its two remaining meetings this year, while indicating fewer rate cuts for next year, according to its projection materials released last week.