Inflation Indicators Show Slowest Monthly Increases in 2020

The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) Index, grew at its slowest monthly pace since late 2020 in August. The year-over-year growth was 3.5%, in line with expectations, while the core PCE, which excludes food and energy, grew 3.9%. On a monthly basis, core PCE rose 0.1%, the lowest rate since November 2020. The data suggests that inflation may be cooling, aligning with the Consumer Price Index for August. The Federal Reserve expects core PCE to fall quicker than initially projected this year, but other economic developments could still impact interest rate decisions. A government shutdown could also disrupt the release of economic data, potentially affecting the Fed's decision-making process.