Inflation slowed a little last month.

At the same time, Americans spent more money.

Consumer prices rose 3.4% in August compared with a year earlier.

The Commerce Department said this on Wednesday.

That was below the 3.7% that economists had expected.

Prices rose 0.3% from July to August.

That was up from 0.1% in July.

Core inflation also came in lower than expected.

Core inflation does not include energy and food, because their prices change a lot.

It rose 3% in August from a 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 faster.

U.S. markets went up on the news.

Investors bet that a rate hike from the Federal Reserve might be delayed.

The Fed is expected to raise interest rates.

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

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

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

It was the first time in three years.

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

It could happen as soon as late next month.

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

He said in an email that inflation is going down.

But it is still not close to the Fed's goal, and it is not getting better.

The report looked at 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.

Even so, spending jumped 0.9% from July to August.

That was up from 0.1% the month before.

After-tax incomes were unchanged in August, after adjusting for inflation.

They had risen 0.3% in July.