Inflation in the US: PCE drops to 6% in October, the FED's favorite measure
Personal expenses increased by 0.8% due to an increase in their income.
Photo: Michael M. Santiago / Getty Images
In its most recent balance sheet, the Department of Commerce announced that the Personal Consumption Expenditures (PCE) price index stood at 6%, a lower figure than the 6.3% presented in September.
This inflation indicator allows the Federal Reserve to have an overview of the behavior of consumer prices.
Regarding September, Prices increased 0.3% in October, which represents the same increase registered during the eighth and ninth months of this year.
Apart from the cost of energy and volatile food, the core PCE rose 0.2% this month, and in the last 80 months its increase reached 5%.
While the figures for Annual basic PCE coincided with the forecasts of the economists consulted by Refinitiv; the monthly increase was below the 0.3% projected by the experts.
Today, we learned inflation moderated and incomes grew in October, following news that our economy grew at an even stronger pace from July to September than previously thought. ‘re seeing initial signs that we’re tackling inflation as we transition to steady, stable growth.
— President Biden (@POTUS) December 1, 20222022
On the other hand, the report also showed that the personal income increased by 0.7% in October, compared to the rise of 0.4% shown in September.
Regarding personal expenses, the data evaluated shows an increase of 0.8% in the last reading, and 0.5% when the effect of higher prices is taken into account.
Regarding the behavior of the consumer market during October, the main driven The reasons for the increase in spending by the US population were new cars and trucks, furniture and other expensive items for the home, as well as the habit of eating out.
In this regard, financial specialists agree that a greater demand for goods and services contributes to increasing prices unless they also an increase in supply arises to satisfy said need.
In this sense, high incomes, driven by a strong labor market, tend to boost increased demand.
According to President Joe Biden, the behavior of the PCE during October shows that the strategy to move the country’s economy forward is moving in the right direction.
“The American people must have confidence that our plan to address inflation, without giving up all the historical economic achievements that American workers have achieved, it is working,” the president said in a statement.
