The Federal Reserve’s preferred inflation gauge showed that core inflation rose 3.0% over the year in August, coming in below economists’ 3.3% forecast. 

The broader Personal Consumption Expenditures (PCE) price index increased 0.3% in August, bringing annual headline inflation to 3.4%, while core PCE rose 0.2% for the month. 

Energy prices were a major contributor to the increase, with gasoline prices rising 4.4% and transportation services increasing 1.4%. 

At the same time, consumer spending remained strong, rising 0.9% in August, while personal income increased 0.2%, giving the Federal Reserve mixed signals about inflation and economic demand, CNBC has reported.

The report provided a softer inflation reading than expected, but core inflation remains above the Fed’s 2% target, leaving policymakers with continued uncertainty over the timing of future interest-rate decisions.