WASHINGTON: The US Federal Reserve’s preferred annual inflation indicator came in at 2.7% in September, according to Commerce Department figures released Thursday. This figure slightly exceeded expectations, which were set at 2.6%, following a similar annual rise in the core personal consumption expenditures (PCE) price index in August.
According to Anadolu Agency, the core PCE price index experienced a 0.3% increase in September, aligning with previous estimates and following a 0.2% month-on-month rise in August. The broader PCE price index, encompassing food and energy prices, rose by 2.1% annually in September, a slight decrease from the 2.3% increase observed in August, but still meeting expectations. On a monthly basis, the index rose by 0.2% in September, consistent with forecasts after a 0.1% gain in August.
The Federal Reserve has implemented 11 interest rate hikes between March 2022 and July 2023 to curb record inflation, boosting the federal funds rate to a target range of 5.25% – 5.5%, the highes
t level in 22 years. The US central bank skipped several rate hikes last year and this year before executing a significant rate cut of 50 basis points on September 18.
The Commerce Department’s Bureau of Economic Analysis reported a 0.1% decrease in prices for goods, while prices for services saw a rise of 0.3%. Annually, goods prices fell by 1.2%, contrasted by a 3.7% increase in service prices. Food prices rose by 0.4% while energy prices dropped by 2.0% on a monthly basis. Annually, food prices increased by 1.2% and energy prices decreased by 8.1%.
The report also highlighted a 0.4% increase in real PCE during September, driven by a 0.7% surge in spending on goods and a 0.2% rise in spending on services. Among goods, nondurable goods were the largest contributors to the increase, with food services and accommodations leading the rise in services.
President Joe Biden commented on the inflation trends, stating that inflation has decreased to 2.1%, nearing the Fed’s 2% target. He emphasized that despite pr
edictions of a recession being necessary to lower inflation, the economy has grown more than 12% during his administration, marking the fastest growth rate in any presidential term in the 21st century. Biden also noted that Americans’ incomes have risen by nearly $4,000 after adjusting for inflation, with gasoline prices dropping to $3.13 per gallon, and below $3 in 21 states.
Biden asserted that there is more work to be done to continue lowering costs, including building millions of new homes, reducing health insurance premiums, and making child care more affordable. He criticized congressional Republicans for advocating tax breaks for billionaires and large corporations while imposing tariffs that could raise costs for families by nearly $4,000 annually, potentially causing inflation to spike.