Prices Rise More Than Expected as Inflation’s Grip on Economy Persists
Breitbart ^ | 27 Oct 2023 | JOHN CARNEY
Posted on 10/27/2023, 1:45:33 PM by Red Badger
The cost of goods and services rose 0.4 percent for a second consecutive month in September, challenging the view that the Federal Reserve’s rate hikes are still bringing down inflation.
The personal consumption expenditure price index was expected to cool slightly from the prior month.
Over the past year, the index is up 3.4 percent. That is unchanged from the August reading, data from the Commerce Department showed Friday. The Federal Reserve says it wants to bring PCE inflation down to two percent, a rate not seen since President Joe Biden took office in early 2021.
The persistence of inflation at the current level casts doubt on the Fed’s claims that the series of rate hikes from March 2022 through July of 2023 are still pulling down inflation. On Thursday, the Commerce Department said the economy grew at an annual pace of 4.9 percent, much faster than expected. That rate of growth is likely inconsistent with falling inflation or the claim that the stance of monetary policy is significantly restrictive.
The PCE price gauge hit a high of 0.9 percent on a month-to-month basis in June of 2022, the fastest clip of price gains since 2005. On a year-over-year basis, the PCE price index increased 7.1 percent in June 20222, the worst inflation since 1981.
The monthly pace of price gains fell from 0.6 percent in January of this year to 3.1 percent in February, a welcome respite from the prior year’s wave of high inflation that was taken as a sign that the Fed’s monetary tightening was wringing price pressures out of the economy. For the following five months, monthly inflation bounced around in a range of three to one percent. In August, however, price gains jumped back up to 0.4 percent...
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