An inflation gauge closely watched by Federal Reserve policymakers continued to slow in August as the pace of price growth trended closer to the Fed's target.

The Commerce Department reported Friday that the personal consumption expenditures (PCE) price index rose 0.1% from the prior month and 2.2% year over year. The annual figure came in cooler than the estimates of economists polled by LSEG.

Core PCE, which excludes volatile food and energy prices, rose 0.1% for the month and increased 2.7% from a year ago, in line with estimates and little changed from a month ago.

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