Fed's Preferred Inflation Gauge Shows Core Rate Below Expectations

The Federal Reserve's preferred inflation gauge showed core inflation at 3.0% in August, significantly lower than expected.

The personal consumption expenditures price index rose a seasonally adjusted 0.3% for the month, with the 12-month gain at 3.4%. The annual core level was 3%, also below forecasts.

Economists had been looking for increases of 0.3% and 3.7%, respectively. Excluding food and energy, PCE posted a 0.2% climb, which put the annual core level at 3%.

The revised methodology by the Bureau of Economic Analysis for how it measures prices lowered the core July PCE level by 0.36 percentage point.