US inflation cools to 3.4% in August, below forecasts

US inflation rose 3.4% annually in August, below economists' forecasts of 3.7%, according to the Commerce Department. Core PCE inflation also came in lower than expected at 3% annually. The Federal Reserve's preferred inflation gauge rose 0.3% monthly, while core prices increased 0.2%. Energy costs drove gains, with gasoline up 4.4%. Consumer spending rose 0.9% and personal incomes increased 0.2%, showing household resilience. Markets reacted positively, with Treasury yields falling from multi-year highs. The data reduced odds of an October rate hike to 51.5%. Second-quarter GDP was revised up to 2.2% annualized, and private payrolls rose by 90,000 in September.