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Inflation rises again in October with PCE index climbing 5 percent

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Inflation rises again in October with PCE index climbing 5 percent

A key measure of inflation showed consumer prices rising at the fastest pace in three decades, as energy prices and demand for goods and services rose, posing a challenge to both the White House and the Federal Reserve.

According to data from the Personal Consumption Expenditure Price Index released on Wednesday, prices rose 5 per cent in the 12 months to October. This was the fastest pace of growth since 1990.

The gauge was dropped by a 30.2 percent annual increase in the price of energy and a 4.8 percent increase in the price of food. Prices rose 0.6 per cent from September to October, as supply chain disruptions continued over the availability of certain products and components.

The increase was in line with analysts’ expectations, but an increase in the Federal Reserve’s preferred inflation gauge will only add to pressure on the central bank to act quickly to keep prices stable.

Price hikes have shown some signs of fading, as some officials in the Biden administration and the Fed argued they would do earlier this year. The central bank is facing growing calls to end its stimulating bond-buying program and accelerate plans to begin raising interest rates, a process that could slow job gains and risk economic growth. Is.

While inflation has soured consumer sentiment and weighed on Mr Biden’s approval rating, those price increases have come in part from a stronger economic recovery. Separate data released by the Labor Department on Wednesday found that initial jobless claims fell to their lowest level since 1969, falling from 71,000 the previous week to 199,000.

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Mr Biden on Wednesday lauded the drop in unemployment claims, but acknowledged the country is still far from a full recovery and has to address rising inflation.

“We have more work to do before our economy returns to normal,” Mr Biden said in a statement on Wednesday, including raising prices that hurt Americans’ pocketbooks and eroding gains in wages and disposable income. “

In an effort to lower gas prices, the United States and five other world powers on Tuesday announced a coordinated effort to tap into their national oil reserves. Mr Biden has ordered the Energy Department to release 50 million barrels of crude into the Strategic Petroleum Reserve, which is more than traders had expected from emergency reserves, the largest in the world with 620 million barrels.

Consumers are worried about the rise in prices. A University of Michigan survey released Wednesday found consumers expressed less optimism about their finances and the economy’s overall growth prospects in November than at any other time in the past decade. According to the report, the decline in consumer sentiment was the result of a rapid rise in inflation and lack of federal policies that would hurt the household budget.

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