US inflation rises below expectations in August; consumer spending robust

WASHINGTON — U.S. inflation increased less than expected in August and price pressures were more moderate in the prior month than previously reported, likely reducing the urgency for the Federal Reserve to raise interest rates again in October. Another rate hike this year, however, remains on the table as the report from the Commerce Department on Wednesday showed consumer spending surging last month. The economy so far appears to be holding up despite headwinds from the US-Israeli war with Iran, which has raised energy prices, with diesel prices at record highs. Financial markets knocked down bets for a rate increase next month. "The less-than-feared price data for August may buy the Fed time to await more data and pass on October 28, but still-elevated inflation and a resilient consumer and economy point to another rate hike by year-end," said Sal Guatieri, a senior economist at BMO Capital Markets. The Personal Consumption Expenditures Price Index rose 0.3 percent last month after a downwardly revised 0.1 percent gain in July, the Commerce Department's Bureau of Economic Analysis s