WASHINGTON – Inflation eased slightly in August as Americans increased their spending, but prices continued to rise at an uncomfortable pace for many voters ahead of the midterm elections.
The Commerce Department reported Wednesday that consumer prices were 3.4% higher in August than a year earlier, falling short of economists’ 3.7% forecast. Prices rose 0.3% from July, accelerating from the 0.1% monthly increase recorded in July and indicating that inflation remains persistent.
Core inflation, which excludes the often-volatile food and energy categories, also came in below expectations. Core prices increased 3% from a year earlier and rose 0.2% between July and August, compared with a 0.1% monthly gain the previous month.
Inflation remains above the Federal Reserve’s 2% target, while August’s monthly increase suggests price pressures are not yet moving decisively back toward that goal. The Fed raised its key short-term interest rate two weeks ago for the first time in three years as it works to bring inflation under control. Most economists expect another increase before the end of the year, possibly as soon as late next month.
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Elevated prices continue to weigh on the U.S. economy, despite generally solid growth and a low unemployment rate.
U.S. markets rose immediately after the inflation report was released, as investors bet that an anticipated Federal Reserve interest-rate hike could be postponed.
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