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US-INFLATION-INDICATOR-PERSONAL-INCOME
Key US inflation index slows in August
WASHINGTON, Sept 29, 2018 (BSS/AFP) – A key measure of US inflation slowed
in August, retreating from six-year highs recorded earlier in the summer but
still hovering at the central bank’s target, the government reported Friday.
The respite from sustained price pressures follows the Federal Reserve’s
decision this week to raise interest rates, tightening monetary policy to
prevent inflation that policymakers expect to rise into next year.
Meanwhile, the Commerce Department report also showed a pause in consumer
spending in August, with the smallest gains in six months, dampening momentum
a little at the middle of the third quarter.
The Federal Reserve’s preferred inflation measure, the Personal
Consumption Expenditures price index, rose 2.2 percent in August, down from
the 2.3 percent recorded for May, June and July.
The PCE index in May and June were both revised upwards by a tenth of a
point. The index tracks costs in goods and services purchased by individuals.
Excluding the volatile food and fuel segments, core PCE prices rose only
two percent over August of 2017, slower than in July but right at the Fed’s
target rate, the report found.
That important indicator, which the Fed watches closely, has held right on
target for four months in a row.
And prices rose just 0.1 percent compared to July, matching analyst
expectations, but when food and fuel are excluded, the month-to-month “core”
index was flat.
Meanwhile, consumers’ incomes rose 0.3 percent for the second month in a
row, a tenth of a point below forecasts.
But consumer spending slowed slightly, rising just 0.3 percent in August,
in line with economists’ expectations but the lowest since February.
Ian Shepherdson of Pantheon Macroeconomics said an upward revision to
spending in July meant the quarter was likely to see a better-than-expected
gain of about 3.5 percent.
“The likelihood of a clear rebound in auto sales after a soft August makes
this a decent bet,” he wrote in a client note.
BSS/AFP/HR/0935