Moderate US Inflation Likely Buys Fed Time for Next Rate Decision

US inflation rose less than expected in August, with the Personal Consumption Expenditures Price Index increasing by 0.3% last month after a downwardly revised 0.1% gain in July.

The Commerce Department's Bureau of Economic Analysis reported that core PCE inflation, which excludes food and energy components, climbed 0.2% over the month after a downwardly revised 0.1% rise in July.

Despite the moderate increase in prices, economists are still warning that another rate hike by the Federal Reserve is likely by year-end, citing elevated inflation and resilient consumer spending.

The Fed raised its benchmark overnight interest rate to the 3.75%-4.00% range earlier this month, flagging further increases in borrowing costs in the months ahead.