The August Personal Income and Outlays report from the U.S. Bureau of Economic Analysis showed that the headline personal consumption expenditures price index rose by 3.4% year over year, unchanged from July but below expectations of 3.7%. Core PCE inflation (excluding food and energy prices) increased 3.0% year over year, below expectations of 3.3% and unchanged from July. The reading is partly a reflection of a technical recalculation of BEA methodology. The update made to the PCE deflator methodology will be a one-time shift in measured inflation in the U.S.
The ABA Office of the Chief Economist believes the August data highlights the persistence of inflationary pressures stemming from energy supply shocks. Inflation remains well above the Federal Reserve’s 2.0% target. Persistent price growth continues to pressure household balance sheets. Consumer credit performance could deteriorate as consumers face budgetary pressures from rising costs and higher energy prices.
