US consumer inflation slightly cooled down to 2.4 per cent in September from a year ago, a slight drop from August’s 2.5 per cent, and the lowest annual increase since February 2021, according to the Labor Department‘s statement released on Thursday.
However, when excluding the volatile food and energy costs, “core” prices, which provide a better indication of future inflation, remained high in September.This was primarily due to rising costs for medical care and car insurance. Core prices increased by 3.3% from the previous year and 0.3% from August. Economists pay close attention to core prices as they typically offer a more accurate prediction of future inflation trends.
Both monthly headline inflation and core inflation surpassed expectations, rising by 0.2 percent and 0.3 percent, respectively.
Despite the “slight upward surprise relative to what we’re expecting,” Michael Pearce, Oxford Economics’ deputy chief US economist, told news agency AFP that he remains confident in the broader trend of services inflation continuing to decrease over the next 12 months. Services inflation eased from 0.2 percent in August to 0.2 percent in September.
The economy remains a top priority for voters in the upcoming presidential election, with Democratic Vice President Kamala Harris and Republican former president Donald Trump both campaigning on their economic records and criticizing each other’s plans.
Although inflation has moved closer to the Federal Reserve‘s long-term target of two percent, the labor market has shown signs of cooling recently, causing policymakers to shift their focus to the employment aspect of the bank’s dual mandate. In light of this, the Fed decided to cut interest rates by half a percentage point last month and projected an additional half-point cut this year.
Pearce from Oxford Economics believes that Thursday’s inflation data “supports a more measured pace of rate cuts.”
“I think they’re still confident that inflation is heading down, but obviously that, you know, we will see noisy reports like today’s. It’s going to be a bumpy process. It’s not a glide path down to down to two percent,” Pearce added.
PCE inflation November 2024:
Prices barely moved in November but still held higher than the Federal Reserve’s target when looked at from a year ago, according to a Commerce Department measure released Friday. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, showed an increase of just 0.1% from October. The measure indicated a 2.4% inflation rate