Fed's go-to gauge shows sticky inflation as Trump threatens more tariffs

• The data comes hours after President Trump announced a raft of new tariffs on furniture, trucks and pharmaceuticals set to go into effect next week.

By the numbers: The Personal Consumption Expenditures price index increased 2.7% in the 12 months through August, the Commerce Department said on Friday. It had held at 2.6% since June.

• The core index, which excludes food and energy prices, increased 2.9% from one year ago, matching July's pace.

Zoom in: On a monthly basis, PCE rose by 0.3% in August, up a tick from the previous month, while the core gauge rose by 0.2%, slowing from July.

The big picture: The data came alongside new figures on consumer spending, which rose by 0.6% in August.

• That is stronger than July's 0.5% increase, though — adjusted for inflation — spending held at roughly 0.4%.

The intrigue: Consumer spending outpaced income growth last month. Real incomes increased just 0.1%.

• The result was the fourth consecutive drop in the personal saving rate. It fell to 4.6% in August, down more than a percentage point from the peak 5.7% in April.

The bottom line: Inflation remained firmly above the Federal Reserve's 2% target in August, showing the battle ahead for the central bank as it slashes rates to cushion the weakening labor market.

Editor's note: This story has been updated with additional data.