Inflation ticked up a tenth of a percentage point to 3.5% for the year ending in August, as measured by the personal consumption expenditures price index, the gauge favored by the Federal Reserve.
The report Friday morning from the Bureau of Economic Analysis tracks other readings that show inflation increased slightly last month amid the Fed’s campaign to slow it by hiking interest rates.
The latest report shows inflation is still above the central bank’s goal of 2% annual price growth, bad news for the economy and the Biden administration, which has tried to tout other positive economic developments — such as low unemployment and solid economic growth — as proof that the “Bidenomics” agenda is working.
Yet there was also good news in the report. Core PCE inflation, a measure of inflation that strips out energy and food prices and is generally less volatile, fell to a 3.9% year-over-year rate, down from 4.3% in July.
BIDEN IMPEACHMENT: GOP WITNESS SAYS HOLDING A VOTE ON OPENING INQUIRY IS ‘BEST PRACTICE’
While the PCE index is the Fed’s preferred inflation gauge, the more commonly cited headline number is the consumer price index. Inflation was clocking in at 3.7% in August, according to the CPI.
Inflation has fallen greatly from its peak last summer as the central bank hiked rates. And despite the aggressive tightening, other economic indicators have held up surprisingly well. For instance, gross domestic product growth has remained positive.
The Bureau of Economic Analysis reported Thursday that the economy grew at a 2.1% annual rate in the second quarter of this year, near the 2.2% pace the quarter before — surprisingly strong growth given that interest rates are the highest they have been since the turn of the century.
Still, it showed consumer spending increased at a 0.8% annual rate in the second quarter, which is a slowdown from previous months.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
While economic growth has remained above water, many economics expect that the higher interest rates will begin to eat into the broader economy and might result in the U.S. entering a recession down the road.
“PNC is expecting a mild recession starting in the second quarter of 2024 as the impact of higher interest rates continues to work its way through the economy,” said PNC Chief Economist Gus Faucher on Thursday. “The recession should be mild, however, thanks to strong consumer balance sheets and a tight labor market that will deter layoffs.”
