Inflation cooled slightly last month even as consumers stepped up spending

Inflation cooled slightly last month. Inflation cooled slightly last month even as consumers stepped up spending.

Key points

• Fuel rates are shown on a gas pump at a filling station in Richardson, Texas, Friday, March 6, 2026.
• Consumer rates rose 3.4% in August compared with a year earlier, the Commerce Department stated Wednesday, below the 3.7% economist expectations.
• Claims for unemployment benefits drop to 197, 000, the lowest since mid-July as layoffs remain rare.
• Despite elevated rates, Americans accelerated their spending last month, office-holders noted, with spending jumping 0.9% from July to August, up from just 0.1% the previous month.
• Stocks obtained a boost after the rate for a barrel of Brent crude oil slid 1% to settle back below $105.

Fuel rates are shown on a gas pump at a filling station in Richardson, Texas, Friday, March 6, 2026. (AP Photo/Tony Gutierrez).

Excluding the volatile energy and food categories, inflation came in lower than expectations, rising 3% in August from a year ago.

Though rates are still elevated and a challenge for numerous voters that will head to the polls for midterm elections in just over a month, WASHINGTON (AP) – Inflation slowed a bit last month as Americans ramped up their spending.

Consumer rates rose 3.4% in August compared with a year earlier, the Commerce Department stated Wednesday, below the 3.7% economist expectations. On a monthly basis, rates climbed 0.3%, up from 0.1% in July, a sign costs that are still running hot.

U.S. Markets bounced higher immediately on the new inflation reading, with investors betting that an projected interest-rate hike from the U.S. Federal Reserve might be delayed.

Even so, inflation remains above the Federal Reserve's 2% target and the monthly growth in August suggests it isn't moving back toward the target anytime shortly. The Fed lifted its key short-term interest rate two weeks ago for the first time in three years to combat inflation and most economists expect it will do so at least once more this year, possibly as shortly as late next month.

"Inflation's trend is lower but still not close to their target and not improving, either, " Bill Adams, chief U.S. Economist at Fifth Third Commercial Bank, remarked in an email.

Wednesday's report covered a key inflation gauge closely watched by the Fed, known as the personal consumption expenditures cost index. It is similar to the higher-profile consumer cost index. It was issued earlier this month.

High rates have cast a pall on the U.S. Economy, even as expansion is mostly solid and the unemployment rate is low. On Tuesday, the Conference Board's consumer confidence survey fell to its lowest level since 2014, a period that includes both the Great Recession and a global pandemic. Americans' paychecks are growing but not as rapidly as costs.

Inflation for July was previously documented at 3.7% but was revised lower to 3.4% by the administration as part of an update in how it measures cost changes in a number of categories, including investment management, computer software and accessories, and legal services.

For example, the administration previously put a heavy weight on some computer accessories that have jumped in rate since of outsized demand from the AI buildout. The revisions lowered that weight and consequently, the higher rates for some computer equipment are not driving up this measure of inflation as much.

Some of that growth was probable fueled by wealthier Americans cashing in their gains from higher stock rates, a recent report from JPMorgan suggests. Other consumers may be taking on more debt to backing their spending.

After rising 0.3% in July, the report remarked, after-tax incomes, adjusted for inflation, were unchanged on a monthly basis in August.

Healthy consumer spending could fuel a pickup in expansion. In a separate report Wednesday, authorities stated the economy expanded at a 2.2% annual pace in the July-September quarter. Analysts expect that to pick up to a 3% rate in the current quarter. Regarding the Author(s). Christopher Rugaber, Associated Press. News Paul Wiseman, Associated Press September 29, 2026.

U.S. Job openings slipped to 7.1 million in August but labor market remains sturdy.

In practice, the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) additionally demonstrated that layoffs fell and the number of individuals quitting their jobs – a sign of confidence in their prospects – was little changed in August. More From This Author. Economy Christopher Rugaber, Associated Press September 16, 2026.

Federal Reserve hikes key rate for first time in 3 years, defying Trump demands for a cut. Economy Christopher Rugaber, Associated Press September 15, 2026.

Federal Reserve is projected to raise its benchmark rate, defying Trump's demands. Economy Christopher Rugaber, Associated Press September 11, 2026.

U.S. Inflation picked up as gas rates marched higher due to conflict in the Middle East. News Cass Rutledge September 30, 2026. Mississippi 12th in U.S. For doing business in 2026. News Paul Wiseman, Associated Press September 24, 2026.

As U.S. Jobless claims remain at historically low levels and most Americans enjoy job security, fewer individuals applied for U.S. Unemployment benefits last week. Economy Stan Choe, Associated Press September 17, 2026.

U.S. Stocks rally to their best day in 6 weeks after oil rates and bond yields ease.

Stocks obtained a boost after the rate for a barrel of Brent crude oil slid 1% to settle back below $105. That supported pull the yield on the 10-year Treasury down to 4.93%. News Jeremy Pittari September 30, 2026. Mississippi's chronic absenteeism rate showing declines year over year. News Paul Wiseman, Associated Press September 30, 2026.

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England-based SubSea Craft expanding operations, locating U.S. Facility on Mississippi Coast. Business Cass Rutledge September 23, 2026. Raybern Foods expansion in Shannon bringing 70 new jobs to area. Culture Susan Marquez September 30, 2026.

Jackson's own Cassandra Wilson, one of the most successful female jazz singers in modern history. Culture Alistair Begg September 30, 2026. Will He find fruit? Culture Frank Corder September 29, 2026. Mississippi Senators Wicker, Hyde-Smith back Protect College Sport Act. Opinion Roger Wicker September 28, 2026. Putin must be defeated. Opinion Sid Salter September 23, 2026.

Midterm elections in Mississippi shaping up as a familiar exercise in black-and-white. Opinion Bill Cork September 22, 2026. The states winning investment are the states ready to deliver.

In short, inflation cooled slightly last month even as consumers stepped up spending is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.