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Mixed Inflation Data in August

The Federal Reserve’s favorite inflation gauge saw its top number fall for the third month in a row but core inflation saw a slight uptick in August, according to the latest data from the Bureau of Economic Analysis.

  • Y-O-Y: The Personal Consumption Expenditure Index fell for the third month in a row to 6.2% in August, this is down 0.2 percentage points from July and is 0.8 percentage points lower than the 7.0% high in June.
  • M-O-M: The PCE index was up 0.3% from July, this is higher than the 0.1 percentage point drop reported in July but is lower than the full point climb reported in June.

Core PCE. The core index was actually up 0.2 percentage points in August which is higher than projections as economists thought the core index would hold at 4.7% after dropping from the 5.0% high in June.

Incomes Up, Spending Up More. Personal income was up 0.3% in August to an annual rate of $21.895 trillion. Income has now climbed for the 11th month in a row. Personal spending was up 0.4% to an annual rate of $18.05 trillion which had seen a 7-month climb before the slight dip last month.

Savings Rate Holds. The personal savings rates fell slightly but held on to that 3.5% rate which is the same as the prior month but is, unfortunately, the second lowest reading for the year.

BOTTOM LINE: Climbing core PCE means we have not reached peaked inflation just yet.

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