US inflation rose in September as consumers paid more for gasoline and other goods. The rise strengthened economists’ expectations that the Federal Reserve (Fed) could increase interest rates in December.
US PCE inflation rose by 3.6% in the 12 months through September, up from 3.4% in August. This was higher than the Federal Reserve’s 2% inflation target . It also increased by 0.3% in August. The August figure was revised up from the earlier estimate of 0.2%, according to the Bureau of Economic Analysis (BEA). Core PCE inflation rose by 3.1% in the 12 months through September, compared with 3.0% in August. The Federal Reserve left its benchmark interest rate unchanged at 3.75%-4.00% on Wednesday.
Because they can change quickly, rose by 0.3% in September, core PCE inflation, which does not include food and energy prices. Because it excludes the often-unstable prices of food and energy, this measure is closely watched. The increase in consumer spending partly reflected higher prices paid by households.
However, the central bank acknowledged that inflation remained high, according to Reuters’ report on the Fed’s October meeting. Fed Chairman Kevin Warsh said energy prices and related costs had increased again in recent weeks. He said the central bank needed to ensure that price increases in some sectors did not spread across the wider economy. He also stressed the importance of keeping inflation expectations under control, according to Reuters. After adjusting for inflation, consumer spending remained unchanged in September, suggesting that households did not increase the amount they purchased overall, according to Reuters.
