Inflation Remains Stubborn as War-Driven Energy Shocks Continue
US inflation remained elevated in August due to ongoing war-driven energy shocks, according to new data from the Commerce Department. The Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation gauge, rose 0.3% from July, bringing the annual rate to 3.4%, unchanged from the previous month.
The core PCE price index, which excludes volatile food and energy prices, also increased by 0.2% from July, staying at an annual rate of 3% for a third-straight month. Despite stubborn inflation, consumer spending remained resilient, increasing 0.6% in August, the strongest monthly increase in over a year.
Kathy Bostjancic, Nationwide's chief economist, noted that households pinched by higher prices have been reducing their savings rate or relying more on credit to keep up with spending. The strength of the US labor market has helped fuel spending, she said, as employment growth has accelerated and broadened out, keeping unemployment low.