Inflation slows again in August, PCE shows, and points to more Fed rate cuts

Prices in the U.S. rose slightly in August and signaled inflation is waning, paving the way for further reductions in interest rates by the Federal Reserve.

The Fed’s preferred PCE index inched up just 0.1% last month, the government said Friday. That matched the forecast of economists polled by The Wall Street Journal.

The increase in inflation in the past 12 months slipped 2.2% from 2.5%, marking the lowest level since early 2021.

The Fed is aiming to bring inflation down to 2% a year.

The closely followed core rate that strips out food and energy, meanwhile, also rose 0.1%. That was a tick below the forecast and more good news.

The core index is viewed by the Fed and Wall Street as a better predictor of future inflation.