Thursday, September 28, 2023

US inflation rose just 3% in June

In the 12 months to June, the PCE price index rose 3%. This is the lowest annual increase since March 2021, down from 3.8% in May.

Excluding the volatile food and energy components, the PCE price index rose 0.2% after rising 0.3% in the previous month. This reduced the increase in the so-called core PCE price index to 4.1%, the smallest increase since September 2021. The annual core PCE price index rose 4.6% in May.

Annual inflation slows as last year’s increase disappears from the calculation. Food prices have returned to levels before Russia’s invasion of Ukraine in February 2022.

Economists polled by Reuters had expected the core PCE price index to rise 0.2% and rise 4.2% annually. The Federal Reserve tracks PCE price indices for its 2% inflation target.

The Federal Reserve on Wednesday raised its interest rate by 25 basis points to 5.25% to 5.50%, a level last reached just before the 2007 housing market crash and in no way surpassed. Constant for about 22 years.

Fed Chairman Jerome Powell told reporters: “It’s certainly possible that we could raise interest rates again at the September meeting if the data warrants it.” Powell also added that “we may choose to be firm at that meeting.” to stay.”

Slowing inflation and moderate growth in consumer spending have increased the chances that the economy will achieve the soft landing planned by monetary authorities.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.5% last month, the Commerce Department also reported. May data was revised upward to show a 0.2% increase in spending, instead of the previously announced 0.1%. Economists estimated an increase of 0.5%.

The data was included in the advance estimate of gross domestic product for the second quarter published on Thursday.

Consumer spending rose 1.6% on an annual basis last quarter, slowing from 4.2% in the January-March period. The moderation in spending was attributed in part to difficulties in adjusting data for seasonal fluctuations following the recovery in the first quarter.

The increase was enough to boost economic growth to 2.4% in the final quarter, compared with 2.0% in the first three months of the year.

Nation World News Desk
Nation World News Desk
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