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Inflation ran at a fresh 30-year high in August as supply chain disruptions and extraordinarily high demand fueled ongoing price pressures, the Commerce Department reported Friday.

The core personal consumption expenditures price index, which excludes food and energy costs and is the Federal Reserve’s preferred measure of inflation, increased 0.3% for the month and was up 3.6% from a year ago. The monthly gain was slightly higher than the 0.2% Dow Jones estimate and the annual forecast of 3.5%.

That’s the highest since May 1991 and reflective of inflationary pressures that Fed Chairman Jerome Powell said earlier this week he finds “frustrating.”

On a headline basis, PCE prices rose 0.4% for the month and 4.3% year over year, the highest since January 1991. That reflected a 24.9% increase in energy prices and a 2.8% rise in food.

Goods prices rose by 5.5% while services increased by 3.6%.

The rise in inflation came as personal income increased 0.2% for the month, in line with estimates but indicative that real income is falling as inflation rises. Spending accelerated 0.8%, slightly above the 0.7% forecast.

Personal savings totaled $1.71 trillion, running at a 9.4% rate and a decrease from 10.1% in July. The savings rate peaked at 33.8% in April 2020 in the early days of the pandemic as the government rushed out payments to individuals and businesses were shut down to combat the Covid spread.

A separate report Friday morning showed that manufacturing continued to expand.

The ISM Manufacturing index for September registered a 61.1 reading, representing the percentage of companies seeing expansion. Anything above 50 represents growth; the Dow Jones estimate was 59.5.

The survey also showed prices rising, with 81.2% of respondents reporting increases against 79.4% in August.

Order backlogs decreased to 64.8, a drop of 3.4 points from a month ago, but companies overall were still reporting delays.

“Supply chain concerns are growing beyond electronics and chips into most other commodities. Lead times are extending, shipping lanes are slowing, and we will not see an end to this in 2021,” said one respondent in the electrical equipment, appliances and components industry.

Also, consumer sentiment improved, according to the University of Michigan’s index, which rose to 72.8 in September compared to 70.8 in August and a 71 estimate.

With a potential default looming for the U.S. in October, Treasury Secretary Janet Yellen said Thursday she would just as soon see the power over debt limits taken away from Congress.

A bill introduced in May would repeal the national debt ceiling, and Yellen said “yes, I would” when asked during a House hearing if she backs the effort.

She noted Congress makes the decisions on taxes and spending, and should provide the ability to pay those obligations.

“If to finance those spending and tax decisions, it’s necessary to issue additional debt, I believe it’s very disruptive to put the president and myself, the Treasury secretary, in a situation where we might be unable to pay the bills that result from those past decisions,” she said in response to a question from Rep. Sean Casten, D-Ill.

The remarks were made during a hearing before the House Financial Services Committee on the Treasury and the Federal Reserve’s economic response to the Covid pandemic.

Casten said he was asking Yellen about the concept of removing the debt ceiling and not the particular bill, introduced by Rep. Bill Foster, also an Illinois Democrat, along with a trio of Democratic senators.

Yellen this week warned that extraordinary measures her department is using to keep funding the government’s operations expire Oct. 18.

Earlier in the hearing, she said the consequences would be dire if Congress fails to raise the spending limit.

“I think it would be catastrophic for the economy and for individual families,” she said.

The U.S. currently is $28.4 trillion in debt, nearly $700 billion of which has been incurred since President Joe Biden took office and chose Yellen to head the Treasury. The budget deficit through the first 10 months of the fiscal year stood at $2.71 trillion.

Higher interest rates took some recent wind out of the sails in the mortgage market.

After gains the previous week, total mortgage application volume fell 1.1% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $548,250 increased to 3.10% from 3.03%. Points, including origination fee, rose to 0.34 from 0.30 for loans with a 20% down payment.

“Increased optimism about the strength of the economy pushed Treasury yields higher following last week’s FOMC meeting. Mortgage rates in response rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Applications to refinance a home loan, which are highly sensitive to weekly rate movements, decreased 1% from the previous week and were essentially flat from a year ago. The increase in interest rates occurred late in the week and continued into this week, suggesting the negative effect on refinance demand will be more severe in next week’s report.

Mortgage applications to purchase a home fell 1% last week and were 12% lower than a year ago. The weakness in purchase demand is less about rising interest rates, which are still historically low, and more about sky-high home prices.

Prices nationally increased 19.7% year over year in July, up from an 18.7% annual increase in June, according to the latest S&P CoreLogic Case-Shiller Home Price Index. That’s another record increase.

“With home-price appreciation continuing to run hot, increasing more than 19 percent annually in July, applications for larger loan amounts continue to outpace lower-balance loans. The average loan size for a purchase application reached $410,000, its highest level since May 2021,” Kan said.

Price gains are expected to soon start cooling slightly, simply because sales have dropped and more supply is coming on the market. Higher mortgage rates will also take some of the fuel out of rising prices, since potential buyers would face higher monthly payments.