According to data Friday that the central bank follows closely, inflation in August was higher than expected.
After being flat in July, the personal consumption expenditures price index rose in August. Another sign that inflation is broadening is that it was quicker than the estimate.
The core PCE increased from 4.7% the previous month to 4.9% on a year-over-year basis.
The headline PCE increased in August compared to July. It rose even with a sharp decline in gas prices that took the cost at the pump well below the nominal record.
The broadest indicator of where prices are going is the core PCE. The data Friday from the Commerce Department shows that inflation is well above the central bank's 2% long-run target.
The numbers show that spending and income are growing.
The increase in personal income was in line with the estimate. Spending went up 0.4% after a decline of 2% the month before. After-tax income and inflation adjusted spending both went up in the previous month.
The change in spending from goods to services resulted in a 0.6% and 3.0% increase in inflation. Food prices increased while energy prices decreased. The prices of housing and utilities went up.
Stock futures pointed to a slightly higher open on Wall Street, with markets showing little reaction to the news.
The market has been volatile as investors deal with the highest inflation in decades. In order to combat inflation, the Federal Reserve has enacted a series of interest rate increases this year.
With data showing that the rate hikes have yet to bring down prices, Fed officials have remained vigilant about keeping the policy in place.
Fed Chair Lael Brainard said in a speech that rates will remain higher for some time until inflation is brought under control.
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