Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected
- On Wednesday, the Commerce Department reported core Personal Consumption Expenditures inflation rose 3.0% annually in August, below economist expectations, while incorporating retroactive methodological revisions to key price measures.
- The Bureau of Economic Analysis updated its PCE deflator methodology retroactively through early 2021, adjusting calculations for portfolio management, software, and legal services to better reflect price movements.
- Americans accelerated spending by 0.9% in August despite elevated prices, while the headline PCE price index marked a 3.4% annual increase, showing persistent consumer demand alongside stubborn inflation.
- Financial markets rallied as lower-than-expected inflation cooled Treasury yields; New York Fed President John Williams commented Tuesday that he saw "no urgency" for further rate action.
- Sixteen of 18 Federal Reserve officials project further rate hikes this year amid persistent inflationary pressures above the 2% target, with the Commerce Department's third-quarter GDP estimate due October 29.
115 Articles
115 Articles
The PCE stood at 3.4% in August and with an underlying inflation of 3%, giving strength to the Fed's 'doves' who no longer want interest increases in the immediate. Revisions in the index methodology also led to a low update of the July reading.
US dollar retreats after softer-than-expected inflation data
The dollar faced a downturn against key currencies following unexpected inflation results from the US. The US Commerce Department reported the Personal Consumption Expenditures Price Index increased by merely 0.3% last month, contrary to economists' forecasts of 0.4%. This shift affected market predictions about Federal Reserve interest rate adjustments, resulting in lower US Treasury yields.
Inflation Cooled Slightly Last Month Even As Consumers Stepped Up Spending
WASHINGTON (AP) — Inflation slowed a bit last month as Americans ramped up their spending, though prices are still elevated and a challenge for many voters that will head to the polls for midterm elections in just over a month. Consumer prices rose 3.4% in August compared with a year earlier, the Commerce Department said […]
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