2023-09-29 15:53:04
WASHINGTON (AP) — A closely watched inflation gauge by the Federal Reserve rose in August, driven largely by rising gasoline prices. But measures of core inflation slowed, in the latest sign that price pressures remain subdued.
The report issued Friday by the Commerce Department indicates that prices increased 0.4% from July to August compared to 0.2% the previous month. A 10% monthly increase in gasoline prices fueled the rise.
Core inflation, which excludes the volatile items of food and gasoline, rose the smallest in two years in August, a sign that it continues to cool. Fed officials pay special attention to core prices, considered a more accurate indicator of where inflation is headed.
Core prices increased just 0.1% in August, compared to 0.2% in July. It was the smallest monthly increase since November 2021.
For the year, core prices increased 3.9%, compared to 4.2% annually in July. It was also the smallest increase in two years.
American consumers maintained spending in August, but at a much more moderate pace. Friday’s report showed that consumer spending, adjusted for inflation, rose just 0.1% compared to 0.6% in July.
“Overall spending remains in positive territory and inflation is coming down, which will be good news for policymakers,” Rubeela Farooqi, head of U.S. economics at High Frequency Economics, said in a note to clients.
Compared to the previous year, prices increased 3.5% in August, slightly more than the 3.4% annual increase recorded in July. It was the second consecutive increase in the annual figure, which peaked at 7% in June 2022, but is still above the Fed’s 2% goal.
Rising gasoline prices are eroding Americans’ incomes. After some solid gains last spring, inflation-adjusted earnings fell in August for the second straight month.
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