US consumer output rose in August, but core inflation slowed, with annual price increases excluding food and energy easing to below 4.0%.
Consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.4% last month, according to a report from the Board of Trade that reported on Friday. Data for the month of July has been updated to show an increase in production of 0.9% compared to the previously reported 0.8%. Economists on the other hand have predicted production will increase by 0.4%.
Part of last month's production increase reflected higher prices. Gasoline prices rose in August, reaching $3,984 a gallon in the third week of the month, the highest this year, according to data from the US Energy Information Administration. Contrasted with $3.676 a gallon during the same period in July.
With the increase in petrol prices, inflation as measured by the personal consumption price index (PCE) increased by 0.4% in August after rising by 0.2% in July. In the 12 months to August, the PCE price index rose 3.5% after rising 3.4% in July. Annual PCE inflation also increased driven by lower policy comparisons in the previous year, as core inflation pressures eased.
Excluding volatile food and energy components, the PCE price index rose 0.1%, after rising 0.2% in the previous month. The core PCE price index rose 3.9% year-on-year in August after rising 4.3% in July.
The US central bank is eyeing the PCE price index for a 2% inflation target. The Fed kept interest rates steady last week but strengthened a more accommodative monetary policy. Since March 2022, the central bank has increased the policy rate by 525 basis points to the current range of 5.25% to 5.50%.
