Wednesday, February 8, 2023

Fed-watched inflation rate remains high

WASHINGTON ( Associated Press) – An inflation index closely watched by the U.S. Federal Reserve dipped in October but remained high, reflecting the central bank’s intention to continue raising interest rates to cool the economy and prevent rising prices. likely to strengthen.

The Commerce Department report released on Thursday showed that prices rose 6% in October compared to a year ago. This is the lowest level since last November, compared with an annual increase of 6.3% in September. Excluding volatile food and energy prices, so-called core consumer price inflation was 5% in the previous 12 months compared to an annualized 5.2% in September.

On a monthly basis, prices increased by 0.3% from September to October. For basic prices, the increase was 0.2%.

Thursday’s official report also showed consumers spent more in October, even after adjusting for inflation, a sign they remain willing to spend despite higher prices. Spending rose 0.8% from September to October, or 0.5% adjusted for price increases. At the same time, revenue adjusted for inflation increased by 0.4%.

Yet many Americans are taking money from their savings to deal with rising prices. The savings rate fell to 2.3% in October, the lowest level since 2005.

In response to the highest inflation since 1980, the Fed has raised its benchmark rate six times since March, the last four times by three-quarters of a point. The central bank faces the difficult task of bringing inflation down to its target of 2% per year, but without triggering a recession.

On Wednesday, Fed Chairman Jerome Powell said the central bank would reduce rate hikes by half a point at its meeting in two weeks’ time, a message welcomed by financial markets. But at the same time, Powell made it clear that the benchmark rate, which affects many consumer products and commercial loans, will remain high for an extended period.

Nation World News Desk
Nation World News Desk
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