US inflation remained stubborn last month as Iran war continued to lift prices
US inflation remained steady at 3.4% in August as energy costs rose due to the conflict in Iran. Despite high prices, consumer spending reached its strongest level in over a year, though household savings have dropped to a four-year low.
Why it matters
Persistent inflation combined with declining savings rates suggests potential future economic strain for US consumers despite current spending resilience.
An annual update to federal data shows that prices haven’t been rising as fast as previously thought; however, inflation remained stubbornly elevated in August as a war-driven energy shock continued to ripple through the US economy and Americans’ pocketbooks. The Personal Consumption Expenditures price index – the Federal Reserve’s preferred inflation gauge – rose 0.3% from July, bringing the annual rate to 3.4%, unchanged from the month before, which was revised down from 3.7%, according to new data from the Commerce Department. The August PCE report was expected to show some cooling in inflation because of some methodological changes the Commerce Department made to several key categories. Inflation picked up on a monthly basis as fuel and other energy prices shot higher as a result of the war in Iran.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in