Ovunc Kutlu
31 October 2024•Update: 31 October 2024
ISTANBUL
The US Federal Reserve's preferred annual inflation indicator came in at 2.7% in September, according to Commerce Department figures released Thursday.
The figure was slightly higher than expectations of 2.6% after the core personal consumption expenditures (PCE) price index also rose 2.7% annually in August.
The core PCE price index increased 0.3% in September, following a 0.2% month-on-month increase in August, and came in line with estimates.
The PCE price index, which includes food and energy prices, rose 2.1% annually in September, after increasing 2.3% in August year-on-year, also coming in line with expectations.
That index increased 0.2% in September, following a 0.1% gain in August -- also in line with estimates.
The Fed has made 11 interest rate increases between March 2022 and July 2023 to tame record inflation, carrying the federal funds rate to between the 5.25% - 5.5% target range, the highest in 22 years.
The US central bank skipped four rate hikes last year, and five more this year, before making a jumbo rate cut of 50 basis points on Sept. 18.
Prices for goods fall 1.2%, services jump 3.7%
The Commerce Department's Bureau of Economic Analysis said prices for goods fell 0.1%, but prices for services rose 0.3%.
"Food prices increased 0.4 percent and energy prices decreased 2.0 percent," it said in a statement.
Annually, prices for goods plummeted 1.2%, but prices for services jumped 3.7%.
"Food prices increased 1.2 percent and energy prices decreased 8.1 percent," on an annual basis, it added.
There was a 0.4% increase in real PCE during September, which reflected a massive 0.7% gain in spending on goods and a rise of 0.2% in spending on services, the agency noted.
"Within goods, the largest contributor to the increase was other nondurable goods," said the statement. "Within services, the largest contributor to the increase was food services and accommodations.”
'Inflation has come down while our economy has grown'
President Joe Biden said inflation has now fallen to 2.1%, almost at the Fed’s 2% target.
"While critics said we needed a recession to lower inflation, instead inflation has come down while our economy has grown more than 12% over the course of my Administration—the fastest rate of any presidential term in the 21st century," he said in a statement.
Biden noted that Americans' incomes are up almost $4,000 after accounting for inflation, while gasoline prices are down to $3.13 per gallon (3.78 liters) and below $3 in 21 US states.
"We have more to do," he said. "We will keep fighting to lower costs by building millions of new homes, lowering health insurance premiums, and making child care more affordable."
Biden argued that congressional Republicans are fighting for tax breaks for billionaires and big corporations while raising costs on families by nearly $4,000 per year with tariffs that would cause inflation to skyrocket.
"They have a cost-raising agenda—we have a cost-cutting agenda," he added.
