US Fed's inflation indicator softens to 3.7% in September

By Ovunc Kutlu

ISTANBUL (AA) – The US Federal Reserve's preferred inflation indicator softened in September on an annual basis, according to Commerce Department figures released on Friday.

The core personal consumption expenditures (PCE) price index rose 3.7% annually in September, slightly down from the revised figure in August.

While the figure came in line with market expectations, the annual increase for August was revised down to a gain of 3.8% from 3.9%.

On a monthly basis, however, the index rose 0.3% in September, accelerating from a 0.1% monthly increase in August, and also coming in line with market estimates.

Monthly, food prices increased 0.3% and energy prices rose 1.7%.

Annually, food prices were up 2.7%, but energy prices were down less than 0.1% in September compared to the same month of last year.

The PCE price index, which includes food and energy prices, rose 3.4% in September, following a 3.4% year-on-year gain in August, also coming in line with market estimates.

On a monthly basis, the index rose 0.4% in September following a 0.4% month-on-month gain in August, coming slightly higher than market expectations of a 0.3% gain.

The Fed has made a total of 11 interest rate increases since March 2022 to tame record inflation, carrying the federal funds rate to 5.25%-5.5% target range – the highest in 22 years.

Although the bank shipped two rate hikes this year, it expects an additional hike in one of its two remaining meetings this year, while indicating fewer rate cuts for next year, according to its projection materials released last week.