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Key U.S. inflation gauge shows prices cooled in August, raising likelihood of more rate cuts
The Federal Reserve’s preferred inflation measure on Friday provided the latest sign that price pressures are easing, a trend that is expected to fuel further Fed interest rate cuts this year and next.
Prices rose just 0.1% from July to August, the Commerce Department said, down from the previous month’s 0.2% increase. Compared with a year earlier, inflation fell to 2.2%, down from 2.5% in July and barely above the Fed’s 2% inflation target.
The cooling of inflation might be eroding former President Donald Trump’s polling advantage on the economy. In a survey last week by The Associated Press-NORC Center for Public Affairs Research, respondents were nearly equally split on whether Trump or Vice President Kamala Harris would do a better job on the economy. That is a significant shift from when President Joe Biden was still in the race, when about six in 10 Americans disapproved of his handling of the economy. The shift suggests that Harris could be shedding some of Biden’s baggage on the economy as sentiment among consumers begins to brighten.
Grocery costs barely rose last month, according to Friday’s report, and energy costs dropped 0.8%, led by cheaper gasoline.
Excluding volatile food and energy costs, so-called core prices rose just 0.1% from July to August, also down from the previous month’s 0.2% increase. It was the fourth straight time that monthly price increases have fallen below an annual rate of 2%, the Fed’s target. Compared with 12 months earlier, core prices rose 2.7% in August, slightly higher than in July.
“Sticky inflation is yesterday’s problem,” Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said in a research note.
With inflation having tumbled from its 2022 peak to barely above the Fed’s 2% target, the central bank last week cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates. The policymakers also signaled that they expect to reduce their key rate by an additional half-point in November and in December. And they envision four more rate cuts in 2025 and two in 2026.
The ongoing decline in inflation makes it even more likely that the Fed will cut its key benchmark rate further in the coming months.
“From the Fed’s perspective, cumulatively, we think the data show enough progress on key inflation metrics for policymakers to continue cutting rates,” said Carl B. Weinberg, chief economist; and Rubeela Farooqi, chief U.S. economist at High Frequency Economics in a Friday research note. “The softer-than expected nominal spending and income results give them incentive to continue easing.”
On Thursday, Tom Barkin, president of the Federal Reserve Bank of Richmond, expressed support for a cautious approach to rate cuts. In an interview with The Associated Press, he said he favors reducing the Fed’s key rate “somewhat.” But Barkin said he wants to ensure that inflation keeps cooling before cutting the benchmark rate to a level that would no longer restrain the economy.
Tepid consumer spending
Friday’s report also showed that Americans’ incomes and spending ticked up only slightly last month, with both rising just 0.2%. Still, those tepid increases coincide with upward revisions this week for income and spending figures from last year. Those revisions showed that consumers were in better financial shape, on average, than had been previously reported.
“Consumer spending was a touch softer than expected, mostly due to relatively weak goods spending,” Olu Sonola, head of U.S. economic research at Fitch Ratings. “All things considered, this month’s report does not nudge the Fed in the direction of another forceful 50 bps cut in November. Two 25 bps cuts still seem more likely in November and December.”
Americans also saved more of their incomes in recent months, according to the revisions, leaving the savings rate at 4.8% in September, after previous figures had shown it falling below 3%.
The government reported Thursday that the economy expanded at a healthy 3% annual pace in the April-June quarter. And it said economic growth was higher than it had previously estimated for most of the 2018-through-2023 period.
The Fed tends to favor the inflation gauge that the government issued Friday — the personal consumption expenditures price index — over the better-known consumer price index. The PCE index tries to account for changes in how people shop when inflation jumps. It can capture, for example, when consumers switch from pricier national brands to cheaper store brands.
In general, the PCE index tends to show a lower inflation rate than CPI. In part, that’s because rents, which have been high, carry double the weight in the CPI that they do in the index released Friday.
Recent reports suggest that the economy is still expanding at a healthy pace. On Thursday, the government confirmed its previous estimate that the U.S. economy grew at a healthy 3% annual pace from April through June, boosted by strong consumer spending and business investment.
Several individual barometers of the economy have been reassuring as well. Last week, the number of Americans applying for unemployment benefits fell to its lowest level in four months.
And last month, Americans increased their spending at retailers, suggesting that consumers are still able and willing to spend more despite the cumulative impact of three years of excess inflation and high borrowing rates.
The nation’s industrial production rebounded, too. The pace of single-family-home construction rose sharply from the pace a year earlier. And this month, consumer sentiment rose for a third straight month, according to preliminary figures from the University of Michigan. The brighter outlook was driven by “more favorable prices as perceived by consumers” for cars, appliances, furniture and other long-lasting goods.
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Monastery in Thailand under investigation after authorities find 41 bodies allegedly used for meditation
A Buddhist monastery in Thailand is under investigation after authorities discovered more than 40 bodies on site which were allegedly used for meditation practices, police said Sunday.
Forty-one cadavers were found at Pa Nakhon Chaibovorn monastery in Thailand’s Phichit province on Saturday, a senior police officer told AFP.
“The bodies were accompanied with death and body donation certificates,” he said, adding that so far no charges have been filed.
He said police were reaching out to relatives of the deceased to confirm that the bodies were donated willingly.
“We are trying to make sure that none of the dead bodies were stolen,” said the officer who requested anonymity.
The search came days after police discovered 12 bodies at another monastery in neighboring Kamphaeng Phet province on Wednesday, according to Thai local media.
The head of the Phichit province monastery, Phra Ajarn Saifon Phandito, told Thai PBS television channel that the use of corpses was part of a “meditation technique” he developed.
“Many of the people who come to learn are abbots and all these monks… pass on the knowledge,” he said. “I don’t know how many have adopted my technique.”
He also told another local TV station that “practitioners meditate in pavilions that hold coffins with the human remains.”
Kom Pattarakulprasert, director of the Phichit Office of Buddhism, told the Bangkok Post that the inclusion of bodies in meditation was unusual.
“I asked Phra Ajarn Saifon Phandito if there were any cadavers and was told that there were none,” Kom told the outlet. “But when journalists discovered the 41 bodies, I was taken aback by the conflicting stories. I will discuss whether this practice is appropriate with the local head of the clergy.”
Phichit police said they are working with authorities in other provinces to investigate how widespread this practice is.
Charlotte, N.C. — Service workers at Charlotte Douglas International Airport have gone on strike during a busy week of Thanksgiving travel to protest what they say are unlivable wages.
Employees of ABM and Prospect Airport Services cast ballots Friday to authorize the work stoppage in North Carolina, which a spokesperson said began Monday morning.
Officials with Service Employees International Union announced the impending strike in a statement early Monday, saying the workers would demand “an end to poverty wages and respect on the job during the holiday travel season.”
Erik Verduzco / AP
ABM and Prospect Airport Services contract with American Airlines to provide services including cleaning airplane interiors, removing trash and escorting passengers in wheelchairs.
Workers say they previously raised the alarm about their growing inability to afford basic necessities, including food and housing. They described living paycheck to paycheck, unable to cover expenses like car repairs while performing jobs that keep countless planes running on schedule.
“We’re on strike today because this is our last resort. We can’t keep living like this,” ABM cabin cleaner Priscilla Hoyle said in a statement. “We’re taking action because our families can’t survive.”
Several hundred workers were expected to walk off the job and continue the work stoppage throughout Monday.
Most of them earn between $12.50 and $19 an hour, which is well below the living wage for a single person with no children in the Charlotte area, union officials said.
Charlotte Douglas International Airport officials have said this holiday travel season is expected to be the busiest on record, with an estimated 1.02 million passengers departing the airport between last Thursday and the Monday after Thanksgiving.
In addition to walking off the job, striking workers plan to hold an 11 a.m. rally and a 1 p.m. “‘Strikesgiving’ lunch” in place of the Thanksgiving meal that many of the workers won’t be able to afford later this week, union officials said.
“Airport service workers make holiday travel possible by keeping airports safe, clean, and running,” the union said. “Despite their critical role in the profits that major corporations enjoy, many airport service workers must work two to three jobs to make ends meet.”
ABM said it would take steps to minimize disruptions from any demonstrations.
“At ABM, we appreciate the hard work our team members put in every day to support our clients and help keep spaces clean and people healthy,” the company said in a statement last week.
Prospect Airport Services said last week that the company recognizes the seriousness of the potential for a strike during the busy holiday travel season.
CBS News
DHL cargo plane crashes near airport in Lithuania’s capital Vilnius amid concern over alleged Russian sabotage
Vilnius, Lithuania — A DHL cargo plane crashed early Monday near the airport in Lithuania’s capital, killing one person, authorities said as they searched for clues to what caused the tragedy. Lithuanian officials, who in the past weeks have been investigating incendiary devices allegedly sent on Western-bound cargo planes, stopped short of linking the crash with that investigation.
“It is premature to associate it with anything or to make any attributions,” State Security Department chief Darius Jauniskis told reporters.
Images from the crash site in the capital Vilnius showed debris from the plane and packages on fire scattered across the residential area, which had been cordoned off by the emergency services.
Lithuania Fire and Rescue Service/Anadolu/Getty
“We cannot rule out the case of terrorism. We have warned that such things are possible, we see an increasingly aggressive Russia… but we cannot make any attributions or point fingers yet,” Jauniskis said.
U.S. and European law enforcement agencies have been working together for weeks to investigate whether incendiary devices that detonated in July at DHL logistics hubs in Germany and Britain were part of a larger operation directed by Russian military intelligence agencies, the highest level of the Russian government, or by outside individuals acting in the interests of Russia, a source familiar with the matter confirmed to CBS News in early November.
According to the Lithuanian police, the plane, flying from the eastern German city of Leipzig, skidded several hundred yards before hitting the residential house that was set on fire, along with smaller buildings and a car.
Renatas Pozela, head of the firefighting and rescue department, said one person from the plane’s four-member crew died in the crash that happened as the plane came in to land in Vilnius.
Andrius Sytas/REUTERS
Head of National Crisis Management Centre Vilmantas Vitkauskas said the residential building was successfully evacuated, with its 12 residents moved to safety.
German logistics company DHL said the cargo aircraft was operated by its partner SwiftAir and had made an “emergency landing” in Lithuania.
“We can confirm that today, at approximately 4:30 am CET, a Swiftair aircraft, operated by a service partner on behalf of DHL, performed an emergency landing about one kilometer [about half a mile] from VNO Airport [Vilnius, Lithuania] while en route from LEJ Airport [Leipzig, Germany] to VNO Airport,” it said in a statement.
Lithuanian police Chief Arunas Paulauskas said investigators had gone to the hospital to talk to the pilots.
It was not immediately clear what caused the crash.
Earlier this month Lithuania said it had carried out arrests as part of a criminal probe into the sending of incendiary devices on Western-bound planes.
Polish and Lithuanian media said the devices, including electric massagers implanted with a flammable substance, were sent from Lithuania to the U.K. in July and could be behind a lorry fire outside Warsaw.
U.K. anti-terrorism police said last month that they were investigating how a parcel burst into flames at a depot earlier this year, after a similar case in Germany that officials blamed on Russia. The Lithuanian president’s chief security advisor said this month that Moscow had been behind the incidents.
“We know who the source of these operations is. It is Russian military intelligence,” Kestutis Budrys told Ziniu radio. “We cannot let this go unanswered as it will only escalate into the new kinds of actions.”
Poland and Lithuania, both NATO members bordering Russia who have been major allies of Ukraine amid that country’s efforts to fend off Russia’s full-scale invasion, have frequently warned about Russian-inspired sabotage on EU soil.
The 2025 Homeland Threat Assessment published at the end of October said the U.S. continues to be concerned about threats to aviation and air cargo systems, including the “potential use of the air cargo supply chain to ship concealed dangerous and potentially deadly items.”
The U.S. Transportation Security Administration said in a statement in October that it was continually adjusting its security posture as necessary and would “promptly share any and all relevant information with our industry partners, to include requirements and recommendations that help them reduce risk.”
“Over the past several months, as part of a multi-layered security approach, TSA worked with industry partners to put additional security measures for U.S. aircraft operators and foreign air carriers regarding certain cargo shipments bound for the United States, in line with the 2021 TSA Air Cargo Security Roadmap,” the TSA’s statement noted at the time.
