Rates Hold Lows As Fed’s Preferred Inflation Gauge Is Flat In August. Savings Rate 5.8%. (TABLE)

Rates are flat today on tame inflation data. The Personal Consumption Expenditures Index, the Fed’s favorite measure of consumer inflation, was 0.2% in August and 1.5% year-over-year through August. Excluding volatile oil and food costs from the readings, “Core” PCE price index was 0.1% for August and 1.4% YOY through August. The Fed looks closely at Core PCE excluding food and energy prices because of the price volatility of these two items, and the Fed’s zone for reasonable inflation is 1-2% per year. At 1.4%, Core inflation is within their comfort zone, and PCE inflation has been stable for a year. Mortgage bonds are holding near record levels, which holds rates down at record lows.

Personal income was up 0.5% in August, which is slightly above the range of the last 6 months. Wages rose 0.3%, which is roughly the same monthly level for all of 2010. The household savings rate was 5.8%, which is down from the May 2009 all-time record of 6.9%. Below are all key details from the Personal Income & Outlays report. You can automatically create charts and download historical PCE data by scrolling to our data section on the right side of the site, or visiting our Data page.