Inflation fell in August to the lowest level in over three years, adding to the Federal Reserve’s case for an interest rate cut next week even as prices remained uncomfortably high for millions of Americans.
The Labor Department on Wednesday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.2% in August from the prior month, in line with the expectations of economists polled by LSEG.
Prices climbed 2.5% in August from the same time last year, slightly less than LSEG estimates and down from 2.9% in July. That’s the lowest level since February 2021.
So-called core prices, which exclude more volatile measurements of gasoline and food to better assess price growth trends, rose 0.3% in August from the prior month – slightly above LSEG estimates of 0.2%. The gauge was up 3.2% from a year ago, in line with expectations, and unchanged from last month.
COST-OF-LIVING CRISIS KICKS OFF THE HARRIS, TRUMP DEBATE
Overall, the report indicates that inflationary pressures in the U.S. economy are continuing to ease, though prices remain above the Federal Reserve’s 2% target.
The softer than expected inflation reading comes as Federal Reserve policymakers are set to hold a highly-anticipated meeting in which they are likely to cut interest rates amid signs that the economy is cooling. After the central bank kept interest rates at a 23-year-high range of 5.25% to 5.50% in July, Fed Chair Jerome Powell signaled in an August speech at the Jackson Hole conference that the “time has come” for interest rates.
This is a developing story. Please check back for updates.
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