Iran War Drives US Inflation to Third-Struggle Month

Inflation in the US remained stubbornly high in August due to ongoing effects of the war in Iran, which have driven up energy prices. The Personal Consumption Expenditures price index rose 0.3% from July, with an annual rate of 3.4%. This marks a third-straight month at this level.

Excluding volatile food and energy prices, the core PCE price index increased by 0.2%, maintaining its annual rate of 3%. Despite this, consumer spending has remained resilient, increasing by 0.6% in August - the strongest monthly gain in over a year.

Americans have been drawing down their savings reserves to cope with higher prices, leading to a nearly four-year low saving rate of 4.1% in August. Economists note that households are either reducing their monthly savings or relying more on credit.