August Inflation Holds Steady Amid Energy Price Hikes
US inflation remained steady in August, despite ongoing energy price increases fueled by the Iran war. The Personal Consumption Expenditures (PCE) price index rose 0.3% from July, keeping the annual rate at 3.4%. This is a mixed bag for the Federal Reserve as they monitor inflation levels.
Excluding volatile food and energy prices, the core PCE price index increased by 0.2%, maintaining its annual rate of 3% for the third consecutive month. Consumer spending, however, has been resilient, with inflation-adjusted spending increasing 0.6% in August, the strongest monthly growth in over a year.
Americans have been dipping into their savings reserves to keep up with rising costs, with the saving rate dropping to 4.1% in August, a nearly four-year low. Kathy Bostjancic, Nationwide's chief economist, notes that 'households pinched by higher prices have been either reducing their monthly savings rate or relying more on credit.'