Core Inflation Hits 3.0% in August, Below Forecasts

The Federal Reserve's preferred inflation gauge, the core personal consumption expenditures price index, rose 3.0% in August from a year ago, significantly below the 3.3% forecast. Headline PCE inflation was 3.4%, also lighter than the expected 3.7%. The Commerce Department reported monthly gains of 0.3% for headline and 0.2% for core PCE, both below forecasts. The Bureau of Economic Analysis revised its methodology for several components, which economists expected to lower the measure. Personal income rose 0.2% and spending increased 0.9%, versus forecasts of 0.4% and 0.8%. Stock futures rose and Treasury yields fell as traders reduced odds of an October rate hike, pushing expectations to December. Energy costs drove August's rise, with gasoline jumping 4.4%. Second-quarter GDP was revised up to 2.2% annualized, while New York Fed President John Williams said there is no urgency for another hike.