Latest updates: US inflation at its highest since 1991 as consumer spending exceeds expectations
A measure of US inflation closely watched by the Federal Reserve remained at its highest level in about three decades, while consumer spending rebounded last month despite the spread of the Delta variant of Covid-19.
The Commerce Department’s core personal consumption expenditure index, which excludes volatile food and energy costs, rose 3.6% last month from a year ago. This was in line with consensus forecasts at the level it has been for three months and is the highest level since 1991. Compared to the previous month, core PCE increased by 0.3%.
The larger PCE tonnage grew 4.3% year-on-year, the highest since January 1991.
The data comes as the US central bank moves forward with a cut to its stimulus package that could arrive as early as November and a growing number of Fed officials expect interest rate hikes l ‘next year.
The central bank’s 2% inflation target has already been met, as supply chain issues along with strong consumer demand have driven prices up, and economists argue that the price pressures are s ‘will ease as bottlenecks resolve.
Friday’s report also showed that US consumer spending rose 0.8 percent last month, following a 0.1 percent decline in July. Americans increased their spending on goods and services, including food and beverages, health care, and personal care and clothing services as they continued to dine out. However, spending on cars and parts has declined.
“A surge in Covid infections, low stocks and high prices constrained consumer spending at the end of the summer,” said Lydia Boussour, economist at Oxford Economics. “Yet consumers are not backing down,” she added.
The increase in spending came as personal income rose 0.2 percent, missing expectations of a 0.3 percent increase and following a 1.1 percent increase in July.
Incomes were boosted by rising wages and salaries from private employers as well as government benefits such as child tax credit advance payments, which were partially offset by a decline in federal unemployment assistance. prolonged.