US Inflation Holds Steady at 3.4% Amid War-Driven Energy Shock
US inflation remained elevated in August, stubbornly refusing to cool down as the war-driven energy shock continued to impact the economy and Americans' pocketbooks. The Personal Consumption Expenditures (PCE) price index rose 0.3% from July, with the annual rate holding steady at 3.4%. This was despite a slight reduction in inflation on a monthly basis due to methodological changes made by the Commerce Department.
The core PCE price index, which excludes volatile food and energy prices, increased by 0.2% from July, staying at an annual rate of 3% for the third consecutive month. Consumer spending remained resilient, with inflation-adjusted spending rising by 0.6% in August - the strongest monthly increase in over a year.
However, Americans have been dipping into their savings reserves as prices rise. The saving rate dropped to 4.1% in August, its lowest level in nearly four years. This has led to households either reducing their monthly savings or relying more heavily on credit, according to Kathy Bostjancic, Nationwide's chief economist.