Slowing Inflation Rates Suggest Cooler Economic Outlook

US inflation rates showed signs of slowing down in August, despite rising consumer spending. According to the Commerce Department, prices rose by 3.4% compared to a year earlier, which was lower than the expected 3.7%. On a monthly basis, prices climbed 0.3%, up from 0.1% in July.

Excluding volatile energy and food categories, inflation came in lower than expectations at 3% for August from a year ago. Core prices rose by just 0.2% from July to August. The Commerce Department reported that personal income increased $66.6 billion (0.2 percent at a monthly rate) in August.

The Federal Reserve's preferred gauge, the Commerce Department reported Wednesday, showed core inflation at 3.0% in August, much lighter than expected. This has implications for the upcoming Fed meeting and potential interest rates hikes. Economists surveyed by Dow Jones had been looking for increases of 0.3% and 3.7% respectively.