US personal inflation unchanged in September

The PCE price index, the preferred measurement of the Federal Reserve (Fed) because it observes progress in reducing inflation to its 2% target, increased 0.3% monthly and 6.2% annually in September, registering in both cases the same August figures, reported the Commerce Department.

The indication that the pressure on prices is beginning to ease despite the fact that headline inflation remains high (8.2%), may lead the monetary authorities to opt for less aggressive interest rate hikes for the end of the year.

Although another 75 basis point rate hike is expected this week, we suspect that slowing wage growth will help convince the Fed to slow the pace of tightening in December,” said Andrew Hunter, an economist at Capital Economics.

In addition, the government’s Employment Cost Index showed a considerable slowdown in private sector wage growth during the third quarter, advancing 1.2% compared to a 1.6% rise in the previous period.

This reading suggests that the probability of a scenario of constantly rising wages, pushing prices higher, may be receding. The Fed is keeping a close eye on the gauge as it is seen as one of the best measures of the breadth of the labor market and a predictor of core inflation.

However, Oliver Pursche, an analyst at Wealthspire Advisors, predicts that the Federal Reserve will have to continue to tighten credit conditions.

For 46% of respondents

Prices are a priority for US voters

Gasoline, eggs or houses: Inflation is the main concern of voters in the November elections, in the face of abortion, gun control and climate change.

With 10 days to go before the midterm elections, inflation is the priority for 46% of Americans, up from 37% a month ago, according to a Monmouth University poll conducted this month.

“This can translate into more enthusiastic Republicans and less motivated Democrats,” says Patrick Murray, director of the institute.

“If you’re under 40 or even 50, you’ve never seen inflation this high…until now,” said Farrokh Langdana, an economics professor at Rutgers Business School. (AFP)