August PCE: Key fed inflation gauge rises 2.2.% annually, beating expectations

Sept. 27 (UPI) -- Inflation continued to inch closer to the Federal Reserve benchmark target Friday, falling to 2.2% year-to-year in August amd beating Wall Street forecasts.

The personal consumption expenditures price index, one of the gauges the Federal Reserve looks at to determine monetary policy, targets the cost of U.S. goods and services. That cost rose 0.1% in August. The 2.2% rise in cost over the past 12 months was the slowest rise since February 2021.

Dow Jones economists had predicted that the 12-month inflation would rise 2.3% in August. The 0.1% rise in prices in August was in line with Wall Street anticipations.

A statistic that continues to worry economists from the report was the core PCE index, which excludes food and energy costs, which rose 2.7% over 12 months in August, 0.1% higher than it was in July.

Overall, however, economy watchers appeared to be happy with the PCE August results.

"Add today's PCE Price Index to the list of economic data landing in a sweet spot," Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley , said, according to CNBC.

"Inflation continues to keep its head down, and while economic growth may be slowing, there's no indication it's falling off the cliff."

Prices over the past month fell 0.2% for goods while increasing 0.2% for services. Food prices increased by 0.1% while energy prices fell by 0.8%.

Over the past 12 months, the price of goods increased by 0.9% while the price of services increased by 3.7%. Food prices increased by 1.1% while energy prices tumbled by 5%.

In a statement released from the White House, President Joe Biden praised the development, noting that it comes after Thursday's news that the economy had grown more than 10% and incomes were up nearly $4,000, after accounting for inflation.

"We have more work to do to lower costs and create opportunities for Americans," Biden said in the statement.

"The vice president and I want to build millions of new homes, continue to lower the price of prescription drugs and health care, and cut taxes for families, small businesses, and industries of the future," he said. "Congressional Republicans would take the opposite approach -- raising costs for middle-class families by nearly $4,000 per year while giving more tax cuts to the wealthy and big corporations.

"That's not how you grow the economy or the middle class," Biden said.