Rise of Key Inflation Metric and Spending Increase in the US
Recent data indicate that the preferred inflation metric of the Federal Reserve, known as the Personal Consumption Expenditures (PCE) index, has slightly increased in August 2024. This highlights the ongoing efforts of the Fed to control inflationary processes in the country. The index rose by 0.2% compared to the previous month and by 3.8% year-on-year, slightly above analyst forecasts.
Along with the rise in inflation indicators, consumer spending is also on the rise, which may exert pressure on the Fed in its battle against inflation. Spending increased by 0.5% in August, demonstrating sustained consumer confidence and supporting economic activity in the country. This spending dynamic also suggests that American households continue to spend actively despite economic uncertainties.
The labor market situation remains relatively stable, and this is also an important factor in assessing economic activity. The unemployment rate is low, which supports demand for goods and services. Economists expect that the Fed will closely monitor these indicators when making decisions regarding monetary policy.
The Fed is still engaged in the fight against inflation, which remains relevant due to high energy and food prices. Comments from central bank representatives suggest that further changes in interest rates may occur if inflation does not begin to show a steady decline.
Thus, recent data emphasize the complexity of balancing support for economic growth and controlling inflationary processes. The Fed now faces a decision on how to respond to rising spending and weak inflation reduction.
