The government said Wednesday that a key index of what Americans pay for goods and services came in lower than expected for August, easing pressure on the Federal Reserve to raise interest rates.
The Personal Consumption Expenditures Price Index rose 0.3% in August, or 3.4% annually, according to the Bureau of Economic Analysis.
Core inflation, which excludes volatile food and energy prices, came in at 3% for the year.
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Both measures were slightly lower than Wall Street expectations of 3.7% for annual PCE and 3.3% for core inflation.
The PCE index is the Fed’s primary tool in evaluating inflation and whether to raise interest rates.
In mid-September, the Fed raised interest rates for the first time in three years. Central bankers said they were concerned about inflation measures that remain well above their target rate of 2%.
President Trump wants the Fed to lower rates, saying more favorable borrowing terms will let the economy flourish. He is not getting his wish, though the lower-than-expected PCE reading could encourage the Fed to leave rates alone at its late October meetings.
Dow Futures surged by 100 points early Wednesday after the PCE report.
Central bankers will decide on rates days before the midterm elections that will determine whether Mr. Trump’s Republican Party retains its congressional majorities.
The president says Democrats created an affordability crisis through government spending during the Biden years, and that he’s made progress in reducing the price of eggs and other products.
Still, polling suggests Americans are struggling with high costs, particularly high fuel costs from the Iran war.
Mr. Trump says fuel prices will plummet once he resolves the conflict, and that short-term economic pain is worth the price of keeping a nuclear weapon out of Tehran’s hands.
Democrats are hammering Mr. Trump over high prices, saying he pledged to bring down costs but inflation remains uncomfortably elevated.
“Today’s [PCE] report confirms that costs are still too high under President Trump,” said Rep. Brendan Boyle, Pennsylvania Democrat and ranking member on the House Budget Committee. “While Trump builds himself a gilded ballroom, his Iran war, his tariff taxes, and his health care cuts have made life in America even more expensive for working families.”
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