Key US inflation index slows in October
The Personal Consumption Expenditures price index, the Fed's preferred inflation statistic, rose a token 0.1 per cent, in line with expectations and slower than the 0.4 per cent gain in September. (AFP/KENA BETANCUR)
WASHINGTON: A closely-watched US inflation measure retreated in October as a hurricane-related spike in energy prices subsided, according to new data published Thursday.The fresh sign of tepid inflation could weaken the case for the Federal Reserve to raise interest rates next month, as it is widely expected to do.The central bank appears poised tighten monetary policy for the third time this year to remove stimulus from the economy in the belief that inflation will rise - eventually - even though there are few signs of upward pressure on prices.The Personal Consumption Expenditures price index, the Fed's preferred inflation statistic, rose a token 0.1 per cent, in line with expectations and slower than the 0.4 per cent gain in September.Significantly, 12-month measure retreated by at tenth to 1.6 per cent, slipping further from the Fed's two per cent target. The measure is now down 0.6 percentage points since February.And the core 12-month measure, which strips out volatile food and fuel prices, held steady at 1.4 per cent. This measure has not surpassed the two per cent level in more than five years.
In the data for last month, the energy index fell 1.1 per cent, partly offsetting September's 6.8 jump, fueled by the temporary shutdowns of oil production and refining in the southeast Texas energy hub in the wake of August's Hurricane Harvey.Excluding food and fuel prices, the core index gained a stronger 0.2 per cent, the same as September, and also in line with analyst expectations.Food prices were unchanged for the third month in a row.The report follows Wednesday's release of a Fed survey showing businesses are seeing widespread, albeit modest, increases in prices and wage pressures that are beginning to mount as a result of labour shortages.
The October PCE report also showed incomes rising faster than spending - with personal income up by US$65.1 billion, or 0.4 per cent compared to the prior month. Personal expenditures rose 0.3 per cent, or US$34.4 billion, the biggest gain since February.
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