US core PCE inflation cools to 3.0% in August, below forecasts

US consumer prices rose less than expected in August on the Federal Reserve’s preferred inflation gauge, the Commerce Department reported on 30 September, CNBC said.

Softer than expected

The personal consumption expenditures price index increased a seasonally adjusted 0.3% for the month, putting the 12-month gain at 3.4%. Economists surveyed by Dow Jones had expected 0.3% and 3.7% respectively. Excluding food and energy, core PCE rose 0.2%, leaving the annual core rate at 3.0% versus forecasts of 0.3% and 3.3%.

CNBC noted the Bureau of Economic Analysis adjusted how it computes several index components; the impact of those revisions on the final figures was not immediately clear. Energy was a main driver of the monthly headline rise: gasoline jumped 4.4% and energy goods and services rose 2.3%. Personal income rose 0.2% while spending increased 0.9%.

Markets and the Fed path

Stock futures gained and Treasury yields fell after the release, with traders pricing less chance of an October rate hike, CNBC reported. TradeStation’s David Russell called the print “good news for investors worried about the recent surge in bond yields,” while noting the data predate September’s diesel-price surge. Both headline and core remain well above the Fed’s 2% target. Separately, final second-quarter GDP was revised up to a 2.2% annualized rate from 1.5%.