Inflation Report Shows Tariffs’ Slow, But Extended Impact
Federal Reserve Chair Jerome Powell said this week that the effect of tariffs on inflation would show up gradually, but last for several quarters. Friday’s PCE inflation report seems to illustrate that point.
The latest data show a slight increase in consumer prices in August, but also the fourth straight month of rising inflation on an annual basis. Headline inflation, which includes food and energy costs, climbed to a six-month high of 2.7% last month.
Still, August’s inflation was largely driven by an increase in food and services prices, mostly centered on travel and financial management fees. There was actually reduced price pressure on trade-sensitive good prices, said Gary Schlossberg, market strategist at Wells Fargo Investment Institute.