3.4%: U.S. inflation drops from 3.7% in July

WHAT HAPPENED

U.S. inflation dropped from 3.7% in July to 3.4% in August, according to the PCE, the indicator most closely monitored by the Fed. Excluding food and gas, it stood at 3.0%, below expectations. What cost $100 now costs $103.40.

WHY IT MATTERS

Prices continue to rise, but more slowly. This may give the Fed room to lower rates, reducing the cost of credit and moving the dollar. Consumption, housing, cars, and credit cards feel it first. At the same time, employment and spending remain strong.

AND FOR YOUR PORTFOLIO

For a long-term portfolio, the signal combines declining inflation with a resilient economy: it can support credit-sensitive companies, although it also keeps markets and the dollar against the peso on alert. It is not a guarantee that rates will drop soon.