PCE Inflation Rate Drops Below Projections, Fueling Speculation on Future Rate Hikes

The Federal Reserve's preferred measure of inflation, the PCE price index, dipped to 3.4 percent in August.

This marks a 0.3 percent increase from July and a year-over-year rise of 3.4 percent, according to data released by the Bureau of Economic Analysis.

The core inflation rate, which excludes more volatile food and energy prices, was also at 3 percent in August, slightly below projections from the Federal Reserve Bank of Cleveland, which estimated annual prices would be up by 3.7 percent year-over-year.

In response to persistent inflation, the Federal Open Market Committee (FOMC) raised interest rates by a quarter point earlier this month to a range of 3.75 percent to 4 percent.