WASHINGTON (Reuters) - U.S. inflation accelerated in August, with the Personal Consumption Expenditures (PCE) price index rising 2.7% year-over-year, according to data released Thursday, while personal spending remained steady. The figures inject new complexity into the Federal Reserve’s monetary policy outlook as officials weigh whether to continue prioritizing employment or refocus on curbing inflation.
The latest PCE data, the Federal Reserve’s preferred inflation gauge, shows a pickup from july’s 2.6% increase. This complicates the debate surrounding potential interest rate hikes later this year, as policymakers assess the strength of the economy and the persistence of inflationary pressures. The steady spending suggests continued economic resilience, but also potentially fuels further inflation.
According to Spartan Capital Securities chief market economist Peter Cardillo, “while inflation remains sticky, there is no sign of accelerating to the Federal Reserve’s rate cut at least once this year.”
Bokeh Capital Partners Chief Investment Officer Kim Forest highlighted the central question facing the Fed: “The key issue is whether the Fed will continue to place importance on employment or focus on inflation again.” Forest added that while the PCE was slightly stronger than anticipated, “nothing is particularly eye-catching,” and anticipates the Fed will prioritize upcoming employment statistics.
