The Fed’s preferred inflation measure, which is the price index for personal consumption expenditures increased 1.5% in August over previous twelve months. August 2014 was the 28th straight month this number has been below Fed’s 2% target. Excluding volatile food and energy prices, the core PCE indicator has also increased at 1.5% year over year. This has slightly decelerated from 1.6% in July’14.
The CPI measure rose 1.7% year over year in Aug’14, which was a marked slowdown from the better than 2% pace recorded in the previous four months.
The CPI measure has historically run about half a percentage point below the PCE price index.
(Source: WSJ)
