<body><div> New York (CNN) — Americans and Federal Reserve officials have news to celebrate: Inflation cooled significantly last month, likely giving central bankers more confidence to continue cutting interest rates. The Fed’s favorite inflation gauge, the Personal Consumption Expenditures price index, showed consumers paid 2.2% more for goods and services for the year ended in August, versus 2.5% in July. This marks another step closer toward the Fed’s 2% inflation target, as well as the lowest inflation rate seen since February 2021, when inflation clocked in at 1.9%. The annual increase was below the 2.3% rate economists projected, according to FactSet consensus estimates. On a monthly basis, prices rose 0.1% in August versus the 0.2% increase in July, matching estimates. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> That said, “core” inflation, which strips out volatile food and energy prices, rose last month to an annual pace of 2.7% from 2.6% in July. The acceleration was in line with what economists expected. However, for the month, core inflation inched up by 0.1% in August from 0.2% in July. Economists forecast a 0.2% rise in core inflation last month. President Joe Biden touted the report as a victory for the economy, with inflation coming back down to levels seen before the pandemic. “We have more work to do to lower costs and create opportunities for Americans,” Biden said in a statement Friday morning. <h2> More cuts coming? </h2> The progress seen in recent months — with inflation getting closer to 2% as well as cooling labor market conditions — pushed central bankers to cut rates by <a href="https://www.cnn.com/2024/09/18/economy/interest-rate-cut-decision/index.html" rel="nofollow"> an unusually large half point </a> earlier this month instead of the more traditional quarter-point move. Friday’s inflation report signals that another big cut that helps alleviate borrowing costs for Americans may be on its way. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> Still, Fed Governor Michelle Bowman, who was the only one of 12 officials who voted for a smaller cut at the latest monetary policy meeting, expressed concerns that the bigger cut could “unnecessarily” stoke demand, fueling higher prices. “We have not yet achieved our inflation goal,” she said in a statement published last week. While Bowman may view Friday’s report as a welcome sign, it may not be enough to convince her to vote for a half-point cut at the Fed’s November meeting. But other officials could take it as a sign that they can continue to front-load rate cuts without having to worry as much about inflation. Meanwhile, Fed Governor Christopher Waller said in a CNBC interview last week that Producer Price Index data from August, which captures prices businesses pay at the wholesale level, pushed him to vote for the larger cut. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> The PPI report showed wholesale prices markedly slowed in August to a rate of 1.7% from an annual increase of 2.1% the month before. Wholesale pricing data is generally seen as a precursor to what consumers could expect to pay for goods and services in coming months. <h2> A warning sign from consumer spending, with a hint of reassurance </h2> Friday’s report comes as the mighty American consumer — largely undeterred by the highest interest rates in over 20 years — is becoming more discerning about how they spend their money. Spending last month was up an inflation-adjusted 0.1%, with spending on goods virtually unchanged from July and services spending up 0.2%. But workers are starting to see more meager wage gains: The labor market is weakening, with employers scaling back hiring new workers and the unemployment rate rising significantly over the past year. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> “That puts the consumer in a cautious stance,” said Kathy Bostjancic, chief economist at&nbsp;Nationwide. At the same time, the report also showed that consumers have more savings than previously thought. For the past few months, the Commerce Department has reported that consumers were saving about 3% of their disposable income. The revised data indicates they stashed away closer to 5% for those months as well as in August. However, consumers are still saving less than they had been before the pandemic, when the personal saving rate was around 7%. “The consumer looks to be on sturdier footing,” Wells Fargo economists said in a note to clients Friday. “This suggests households may have a bit more gas in the tank to support consumption.” That may not change the Fed’s calculus on rate cuts, though. Ultimately, data from upcoming job reports is likely to carry the most weight when officials make a decision at their next policy meeting, in November, on whether to cut rates and by how much, Bostjancic told CNN. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate> One concern Fed officials may have is that steeper cuts could, as Bowman expressed, incentivize spending that consumers are currently pushing off, which is helping keep inflation in check. Bostjancic, however, feels that even if the central bank were to lower rates by another half point in November, they’d still be high enough to stop consumers from going on major spending sprees. On the other hand, lower- and middle-income consumers in particular are suffering financially such that “they need some interest rate relief,” she said. The-CNN-Wire ™ &amp; © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved. ​THE-CNN-WIRE (TM) &amp; © 2024 CABLE NEWS NETWORK, INC., A TIME WARNER COMPANY. ALL RIGHTS RESERVED. <nbtemplate data-id="AdPlaceholder" data-content="JTdCJTdE"></nbtemplate><figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=1YbBLr_0vlnxddw00" alt="https://img.particlenews.com/image.php?url=1YbBLr_0vlnxddw00" width="600" height="399" ><figcaption> Jeep vehicles are delivered to a dealership on June 20 in Chicago. </figcaption></figure></div></body>

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New York (CNN) — Americans and Federal Reserve officials have news to celebrate: Inflation cooled significantly last month, likely giving central bankers more confidence to continue cutting interest rates.