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US-INFLATION-INDICATOR-PERSONAL-INCOME
Key US inflation index holds steady at 2% Fed target
WASHINGTON, Nov 30, 2018 (BSS/AFP) – The US Federal Reserve’s favored
measure of inflation stayed right on target last month, another sign that for
now price pressures remain tame, according to government data released
Thursday.
The Commerce Department report also showed Americans dipped into their
savings to fund a spending spree in October, with biggest outlays going to
pay for prescription drugs and household utilities like electricity and gas.
The faster spending should support continued GDP growth in the final
quarter, which contains the crucial holiday period, after buying slowed in
the July-September quarter.
The moderate inflation reading may cheer investors further by removing
some pressure on the Fed to press ahead with steady interest rate increases.
Markets rallied on Wednesday after a speech by Fed chairman Jerome Powell
was viewed as a signal the central bank was near the end of the tightening
cycle.
The Personal Consumption Expenditures price index, the Fed’s preferred
inflation measure, rose 0.2 percent compared to September, a tenth of a point
faster than the prior month — pushed higher by a sudden bump in volatile
prices for energy goods and services.
When food and fuel prices are stripped out, the “core” PCE index rose only
0.1 percent, slower than September’s 0.2 percent increase and below
economists’ expectations.
Over the last 12 months, the headline index rose two percent for the
second month in a row, right on the Fed’s target, while the core slowed a
tenth to 1.8 percent.
Consumer spending had its biggest jump since March, rising 0.6 percent to
$14.2 trillion but this outpaced gains in income, which rose a slower 0.5
percent to $17.8 trillion.
The rise in income, the fastest since January, was primarily driven by
higher worker pay and government social benefits.
But the spending splurge drove down the savings rate to its lowest level
in 10 months.
BSS/AFP/HR/0958