Inflation Cooled Slightly Last Month Even As Consumers Stepped Up Spending

Inflation cooled slightly in August even as Americans increased spending, according to the Commerce Department. Prices rose 3.4% year over year, below economists’ 3.7% expectations, and increased 0.3% month to month versus 0.1% in July. Core inflation, excluding food and energy, rose 3.0% from a year earlier and 0.2% on a monthly basis. Markets responded positively, with investors betting a Federal Reserve interest-rate hike could be delayed. Still, inflation remains above the Fed’s 2% target, and the report arrived as the Fed raised its key short-term rate two weeks earlier for the first time in three years, with another hike expected later this year. The release also noted spending jumped 0.9% from July to August.