US inflation likely fell further last month as Fed prepares to cut rates next week

WASHINGTON (AP) -- Inflation in the United States may have hit a three-year low in August, underscoring that the rate of price increases is falling back to pre-pandemic levels and clearing the way for the Federal Reserve to start cutting its key interest rate next week. Year-over-year inflation is thought to have slowed to 2.6% last month. That would be the lowest such rate since March 2021. And excluding volatile food and energy prices, core inflation is believed to have remained unchanged at 3.2%. Inflation peaked at 9.1% in June 2022 -- a four-decade high -- as the economy rebounded from the pandemic recession with unexpected speed and strength.