Fed’s preferred inflation measure falls more than expected to 2.2%

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The Federal Reserve’s preferred measure of US inflation fell more than expected to 2.2 per cent in the year to August, as the central bank considers when next to cut interest rates.

The personal consumption expenditures price index compared with economists’ expectations of 2.3 per cent and July’s figure of 2.5 per cent. The Fed’s target for the headline PCE index is 2 per cent a year.

Core PCE, which strips out volatile food and fuel prices, was 2.7 per cent, matching economists’ expectations of 2.7 per cent. The measure was 2.6 per cent in July.

The central bank cut interest rates by half a percentage point last week and signalled that more reductions would follow.

This is a developing story