US consumer spending was subdued in August as core inflation rose at its slowest rate since 2015.
In line with expectations, consumer spending increased by just 0.1% in August, down from the 0.3% gain in the prior month.
With inflation taken into account, consumer spending actually fell 0.1% in August.
The core PCE price index, the Federal Reserve´s (Fed) preferred inflation measure, fell to an annual rate of 1.3% in August versus July´s 1.4%
While still being well below the Fed´s 2% inflation target, it marks the lowest core PCE rate since 2015.
Core PCE excludes the impact of food and energy prices, so should be more stable than other inflation measures.
The broader measure of inflation, as represented by the Consumer Price Index surprised on the upside in August at 0.4%, up from 0.1% in July, as higher gasoline prices pushed up the overall index.
The US Commerce Department said some of the weakness in consumer spending during August was down to the impact of Hurricane Harvey.
Harvey was also thought to be partly to blame for the 1.8% year-on-year drop in US auto sales in August that was reported at the beginning of September.
Low inflation continues to represent a dilemma for the US Federal Reserve, which has forecast one further rate hike before the end of 2017, in addition to the two rate increases it announced earlier this year.
Relatively low inflation readings this year have been symptomatic of subdued wage growth. This is despite the US labour market remaining relatively tight.