U.S. consumer prices rose less than forecasters expected in August, but the report came with a complication: revisions changed the earlier inflation picture.
The Bureau of Economic Analysis reported Sept. 30 that its personal consumption expenditures price index, excluding food and energy, rose 3.0% from a year earlier. That was below the 3.3% forecast in the Dow Jones survey, CNBC reported. Overall PCE inflation was 3.4%, compared with a forecast of 3.7%.
Prices still rose from July
Core prices increased 0.2% in August, while the overall index rose 0.3%. Both monthly increases were larger than July's revised 0.1% readings. Beating a forecast did not mean prices fell.
The release included the BEA's annual update, with revisions to personal income and outlays estimates reaching back to January 2021. CNBC reported that changes to how the agency measures several prices, including legal services and portfolio management, lowered July's annual core inflation reading by 0.36 percentage point.
That revision matters when comparing the new release with the inflation picture available before it. Both annual inflation measures also remained above the Federal Reserve's 2% target.
Spending increased even after inflation
Consumers spent 0.9% more in August in dollar terms, according to the BEA release. After adjusting for inflation, spending rose 0.6%, up from a 0.1% increase in July.
Personal income increased 0.2%. Inflation-adjusted disposable income, the money left after personal taxes, was unchanged. The spending increase therefore came without a corresponding monthly gain in that measure of purchasing power.
CNBC reported that traders reduced their expectations for an October rate hike after the release, while still anticipating an increase in December. Those market expectations were not a commitment from the Fed.
The BEA scheduled its next income and spending report, covering September, for Oct. 29 at 8:30 a.m. EDT.
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