US inflation continues to cool down

On October 31, the US Department of Commerce announced that the Personal Expenditures Price Index (PCE) in September increased by 2.1% over the same period last year. This rate is lower than 2.3% in August and closer to the 2% target set by the US Federal Reserve (Fed).

PCE is the Fed’s preferred measure of inflation, having a major impact on its interest rate decisions. Last month’s price increase matched the forecasts of analysts in a FactSet survey.

However, if not counting frequently fluctuating energy and food, PCE increased by 2.7% over the same period last year and 0.3% last month. This level is similar to August.

Inflation in the US in September was mainly due to the service sector. House price growth has decelerated to 0.3%. Energy products and services decreased 2%.

US inflation has continuously cooled down recently, currently far from the peak of 9.1% in mid-2022. Inflation approaching the target caused the Fed to turn its attention to the labor market, while lowering interest rates by 50%. basis point (0.5%) last month.

Economists say inflation in the world’s largest economy is on the right track. Factors that pushed prices up during the pandemic gradually disappeared. Demand is also increasingly returning to normal levels.

Minutes of the September meeting showed that the majority of Fed officials supported starting a period of monetary easing. The Fed has raised interest rates by 525 basis points (5.25%) for the period 2022 – 2023. Last month, the agency reduced interest rates for the first time since 2020, bringing interest rates to 4.75-5%.

The Fed’s next meeting takes place next week, right after the US presidential election. This agency is forecast to continue to lower interest rates by another 25 basis points (0.25%).

Data from the US Department of Commerce also shows that people’s income and spending accelerated in September. Accordingly, personal income increased by 0.3%, higher than August and matching analysts’ forecasts. . Consumption also increased by 0.5%, slightly better than the forecast of 0.4%.