The numbers: The cost of goods and services rose a sharp 0.4% in August — the biggest increase in seven months — mostly because of higher gas prices. But inflation more broadly continued to slow. The increase in the so-called PCE price index over the past year climbed to 3.5% from 3.4%, the government said Friday. The price gauge is the Federal Reserve’s preferred measure of inflation.
The core PCE rate of inflation, however, rose a soft 0.1% last month. Economists polled by The Wall Street Journal had forecast a 0.2% increase The core rate omits volatile food and energy costs and is viewed by the Fed as a better predictor of future inflation trends. The rate of core inflation over the past year decelerated to 3.9% from 4.3%, putting it at a nearly two-year low. Big picture: The rate of inflation is gradually slowing, but the recent downtrend has been interrupted by a sharp increase in oil prices, at least for now. The Fed is primed to stop raising interest rates if it sees more evidence inflation is on the wane. But it’s likely to keep rates …
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