Inflation Hits 3.4%, Despite Slightly Improved Numbers
U.S. inflation slowed to 3.4% in August from the same month last year, down from a forecasted 3.7%, according to data released by the Commerce Department on Wednesday.
The monthly increase was 0.3%, an uptick from July's 0.1%. Core prices, excluding volatile energy and food categories, rose 3% in August compared to last year, also lower than expected.
Despite the slightly improved inflation numbers, prices remain above the Federal Reserve's target of 2%. Many economists expect the Fed to raise interest rates again soon to combat the ongoing inflation challenge.
The Commerce Department data covers a key inflation gauge closely watched by the Fed, known as the personal consumption expenditures price index. Consumer spending picked up in August, rising 0.9% from July to August, with some of that increase attributed to wealthier Americans cashing in their gains from higher stock prices.
Healthy consumer spending could fuel a pickup in growth, which is expected to be around 3% in the current quarter, according to analysts.