Inflation Indicators: Slowest Increase Since September 2021

The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) Index, grew at its slowest pace since September 2021 in August, with a year-over-year increase of 3.5%. The "core" PCE, which excludes food and energy categories, grew 3.9% year over year. These figures align with the Fed's efforts to tame inflation, as Chairman Jerome Powell noted that inflation remains above the target of 2%. The Fed expects core PCE to peak at 3.7% this year before cooling to 2.6% next year and 2.3% in 2025. The Fed is closely monitoring economic developments that could impact inflation's trajectory.