US Inflation Rises to 3.4% as Energy Prices Skyrocket
The US inflation rate remained high in August due to the ongoing war-driven energy shock. The Personal Consumption Expenditures price index, which is the Federal Reserve's preferred inflation gauge, rose 0.3% from July, bringing the annual rate to 3.4%. This is unchanged from the previous month.
The Commerce Department revised its data for several key categories, including portfolio management and investment advice services, legal services, and computer software and accessories. Economists estimated that these changes could lower the annual PCE inflation rate by a couple of percentage points.
The core index, which excludes volatile food and energy prices, rose 0.2% from July, staying at the downwardly revised annual rate of 3% for a third-straight month. Inflation-adjusted spending was up 0.6% in August, the strongest monthly increase in more than a year.
Kathy Bostjancic, Nationwide's chief economist, noted that households pinched by higher prices have been either reducing their monthly savings rate or relying more on credit.