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By Beiyi Seow
A key indicator of US inflation stayed steady in September, the government reported Friday, as policymakers push on in their battle against persistent price increases. online news
The personal consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred inflation gauge, rose 3.4 percent from a year ago — the same rate as in the preceding two months — said the Commerce Department.
The data comes days before Federal Reserve policymakers gather for a two-day meeting to mull whether to raise interest rates again to combat stubborn inflation.
While consumer inflation has cooled, the latest figures remain well above officials’ two percent target and could prompt further action.
Fed policymakers are due to announce their rate decision next Wednesday, with analysts generally expecting them to hold off further increases for now as the effects of earlier rate hikes ripple through the economy.
A separate report released Friday by the University of Michigan indicated consumer sentiment weakened in October, with lower expectations about business conditions and personal finances.
These reflect “ongoing concerns about inflation and, to a lesser degree, uncertainty over the implications of negative news both domestically and abroad,” the report said.
‘Stickiness’
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From August to September, the core PCE price index excluding food and energy rose 0.3 percent, up from 0.1 percent growth in the prior month, said the Commerce Department.
From September last year, the core PCE price index rose 3.7 percent, a touch below August’s figure.
This “reflects the stickiness of core services inflation, which is still too strong to be consistent with inflation falling back to the Fed’s two percent target,” said Michael Pearce of Oxford Economics.
Meanwhile, consumption accelerated between August and September, boosted by spending on services such as international travel and on housing and health care, Commerce Department data showed.
The US economy has shown more resilience than analysts expected in the face of rapid interest rate hikes, but analysts also expect the full effect of existing hikes have yet to be felt.
For now, it appears that “inflation is coming down while growth remains robust, contrary to what many had predicted,” said White House National Economic Council Director Lael Brainard in a speech on Friday.
Rubeela Farooqi of High Frequency Economics added: “Overall, spending remains positive, and inflation is slowing, a welcome combination for policymakers.”
“We continue to expect a slower pace of growth going forward and a further easing in price pressures,” she added in a note.
bys/dw
© Agence France-Presse
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Below are excerpts published at the Bureau of Economic Analysis
Personal Income and Outlays, September 2023
Personal income increased $77.8 billion (0.3 percent at a monthly rate) in September, according to estimates released today by the Bureau of Economic Analysis (table 2 and table 3). Disposable personal income (DPI), personal income less personal current taxes, increased $56.1 billion (0.3 percent) and personal consumption expenditures (PCE) increased $138.7 billion (0.7 percent).
The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent (table 5). Real DPI decreased 0.1 percent in September and real PCE increased 0.4 percent; goods increased 0.5 percent and services increased 0.3 percent.
The increase in current-dollar personal income in September primarily reflected increases in compensation, personal income receipts on assets, nonfarm proprietors’ income, and rental income of persons (table 2).
The $138.7 billion increase in current-dollar PCE in September reflected an increase of $96.2 billion in spending for services and a $42.5 billion increase in spending for goods (table 2). Within services, the largest contributors to the increase were other services (led by international travel), housing and utilities (led by housing), health care (led by hospitals and nursing homes), and transportation (led by air transportation). Within goods, other nondurable goods (led by prescription drugs) and motor vehicles and parts (led by new motor vehicles) were the leading contributors to the increase. Detailed information on monthly PCE spending can be found on Table 2.4.5U.
Personal outlays, the sum of PCE, personal interest payments, and personal current transfer payments, increased $175.1 billion in September (table 2). Personal saving was $687.7 billion in September and the personal saving rate—personal saving as a percentage of disposable personal income—was 3.4 percent (table 1).
Prices
From the preceding month, the PCE price index for September increased 0.4 percent (table 5). Prices for goods increased 0.2 percent and prices for services increased 0.5 percent. Food prices increased 0.3 percent and energy prices increased 1.7 percent. Excluding food and energy, the PCE price index increased 0.3 percent. Detailed monthly PCE price indexes can be found on Table 2.4.4U.
From the same month one year ago, the PCE price index for September increased 3.4 percent (table 7). Prices for goods increased 0.9 percent and prices for services increased 4.7 percent. Food prices increased 2.7 percent and energy prices decreased by less than 0.1 percent. Excluding food and energy, the PCE price index increased 3.7 percent from one year ago.
Real PCE
The 0.4 percent increase in real PCE in September reflected an increase of 0.5 percent in spending on goods and an increase of 0.3 percent in spending on services (table 4). Within goods, the largest contributors to the increase were motor vehicles and parts (both new and used vehicles) and other nondurable goods (led by prescription drugs). Within services, the largest contributor to the increase was other services (led by international travel). Detailed information on monthly real PCE spending can be found on Table 2.4.6U.
Updates to Personal Income and Outlays
Estimates have been updated for July and August. Revised and previously published changes from the preceding month for current-dollar personal income….
