Inflation slowed a little last month.

At the same time, Americans spent more money.

Consumer prices rose 3.4% in August.

That compares with one year earlier.

The Commerce Department said this on Wednesday.

That was below 3.7%.

Economists had expected 3.7%.

Prices climbed 0.3% from July to August.

That was up from 0.1% in July.

Core inflation leaves out energy and food.

Core inflation was also lower than expected.

It rose 3% in August from one year earlier.

From July to August, core prices rose just 0.2%.

That was up from 0.1% the month before.

Many economists had feared core prices would rise more.

U.S. markets went up on this news.

Investors think a rate hike from the Federal Reserve may be delayed.

The Fed is expected to raise rates.

Still, inflation is above the Fed's 2% goal.

The August increase shows it is not going back to that goal soon.

The Fed raised its key short-term rate two weeks ago.

That was the first time in three years.

Most economists expect the Fed to raise rates at least once more this year.

It may happen as soon as late next month.

Bill Adams is the chief U.S. economist at Fifth Third Commercial Bank.

He wrote in an email.

He said inflation is going down.

But it is still not close to the Fed's goal.

And it is not getting better.

The report covered the personal consumption expenditures price index.

This is a key measure the Fed watches.

High prices have hurt the U.S. economy.

Growth is mostly solid and unemployment is low.

Prices are high, but spending jumped 0.9% from July to August.

That was up from 0.1% the month before.

After-tax incomes were unchanged in August.

This is adjusted for inflation.

They rose 0.3% in July.