US inflation rises less than expected in Aug

By WASHINGTON: US inflation increased less than expected in August, which could see financial markets further reduce the odds of another interest rate increase from the Federal Reserve next month. The Personal Consumption Expenditures Price Index rose 0.3percent last month after a downwardly revised 0.1percent gain in July, the Commerce Department's Bureau of Economic Analysis said on Wednesday. Economists polled by Reuters had forecast the PCE price index rising 0.4percent after a previously reported 0.2percent gain in July. In the 12 months through August, PCE inflation advanced 3.4percent after increasing by a downwardly revised 3.4percent in July. PCE inflation was previously reported to have increased 3.7percent in July on a year-on-year basis. The BEA changed its methodology for calculating prices for software and accessories, portfolio management fees and legal services in the PCE price index. It also revised the inflation data going back to 2021. Excluding the volatile food and energy components, the PCE Price Index climbed 0.2percent over the month after a downwardly revised 0.1percent rise in July. The so-called core PCE inflation was previously estimated to have gained 0.2percent in July. Core PCE inflation increased 3.0percent year-on-year in August after a downwardly revised 3.0percent advance in July. Underlying inflation was initially estimated to have risen 3.3percent in the 12 months through July. The US central bank tracks the PCE price measures for its 2percent inflation target. US GOODS TRADE DEFICIT WIDENS SHARPLY The US trade deficit in goods widened sharply in August amid a surge in imports, suggesting that trade could remain a drag economic growth in the third quarter. The goods trade shortfall increased 11.5percent to USD132.6 billion last month, the Commerce Department's Census Bureau said on Wednesday. Economists polled by Reuters had forecast the goods deficit at USD115.0 billion. Goods imports soared USD17.4 billion, or 5.5percent, to USD336.1 billion. They were driven by a 16.6percent jump in imports of industrial supplies, which include petroleum. Capital goods imports rose 4.0percent amid an AI infrastructure build out. Food imports increased 5.5percent. But consumer goods imports fell 1.6percent. Exports of goods advanced USD3.7 billion, or 1.9percent, to USD203.4 billion. Exports of industrial supplies rose 8.3percent. But shipments of consumer goods dropped 10.5percent, while those of motor vehicles and parts decreased 6.9percent. Food exports declined 5.6percent. Trade has subtracted from gross domestic product for three straight quarters. Some of the hit from the trade deficit on GDP growth could be blunted by rising inventories. The Census report showed wholesale inventories increased 0.7percent in August while stocks at retailers climbed 0.3percent. US JOB GROWTH LIKELY TO SLOW IN SEPT US job growth likely slowed in September and the unemployment rate is forecast to have been 4.1percent for a third straight month, suggesting the labour market remained stable heading into the fourth quarter. The anticipated moderation would follow a surprise jump in Non-farm payrolls in August, which economists partly attributed to volatility linked to the model the government uses to strip out seasonal fluctuations from the data. The Labour Department's Bureau of Labour Statistics will publish its closely watched employment report on Friday.