U.S. inflation was stronger than expected in August, despite the Federal Reserve Bank’s attempts to combat it through interest rate hikes, data released by the commerce department Friday shows. File Photo by geralt/Pixabay
Sept. 30 (UPI) -- U.S. inflation was stronger than expected in August, despite the Federal Reserve's attempts to combat it through interest rate hikes, data released Friday shows.
Minus energy and food prices, the Personal Consumption Expenditures price index increased by 0.6% in August and 4.9% from a years ago, according to the Commerce Department.
The rise was sharper than Dow Jones estimates, which were 0.5% and 4.7% respectively. The index was flat in July.
The Federal Reserve pays close attention to the PCE price index, which measures what people pay for goods and services, excluding the volatile energy and food markets. The PCE index is considered the Fed's top indicator for inflation.
Including gas and energy, the PCE increased 0.3% in August, compared to a July decline of 0.1%.
The rise comes amid declining fuel prices, according to AAA, after the cost of gas spiked during the summer.
Personal income climbed by $71.6 billion, the same 0.3% it grew by in July, which is in line with estimates. Personal spending increased 0.4% after declining 0.2% the month before, according to the Commerce Department.
Friday's numbers likely point to the central bank continuing to hike the benchmark interest rate.
Federal Reserve Vice Chair Lael Brainard said Friday more needs to be done to curb inflation, before interest rates come down.
"Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target," Brainard said during a speech on Friday in New York City.
"For these reasons, we are committed to avoiding pulling back (interest rates) prematurely."
In a highly anticipated move, the Federal Reserve raised its benchmark interest rate by 0.75 percentage points on Sept. 21, in a move to fight the highest inflation in 40 years.
The move boosted the federal funds rate to the range of 3% to 3.25% after it remained near zero as recently as March.