The inflation in USA It rose in October to 2.3% in 12 months, according to the PCE index, the most critically important for determining monetary policy, when the tariff increases promised by Donald Trump raise fears of a price escalation.
October inflation compares to SeptemberS 2.1% annual rate and is in line with market expectations, according to the PCE index published Wednesday by the Department of Commerce.
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American family income rose more than in September, 0.6% versus 0.3% the previous month. On the other hand, expenses grew less in October (0.4%) than in September (0.6%). The rise in inflation is explained by the services sector, where prices increased 3.9% compared to last year. Prices of goods, conversely, fell 1% in 12 months.
despite this small rise in the PCE, values remain close to the 2% annual objective pursued by the Federal Reserve.
Excluding volatile energy and food prices, core inflation was 2.8% in the year to October versus 2.7% in September. Core inflation marked 0.3% in the month-to-month measurement compared to September.
The previous inflation data, from the consumer price index (CPI), also showed a rebound in October, to 2.6% annually compared to 2.4% in September.
The Fed has a dual mandate: control inflation and maintain full employment. Its main tool is the interest rate with which it acts on the demand for goods and services.
The association is trying to contain the price increases that have weighed on the pockets of Americans since 2021. To that end, it raised its interest rates to make credit more expensive and thus discourage consumption and investment that put pressure on prices.
But a few weeks ago a cycle of flexibility began, with two rate cuts, which today are in a range of 4.50%-4.75%.
The economy as a whole continues to show a very positive trend, which has led Fed officials to consider “gradually moving towards a neutral index,” according to the minutes of the central bank’s Monetary Policy Committee (FOMC) published on Tuesday. .
According to economic theory, a neutral, or natural, interest rate is the level at which the interest rate has neither a restrictive nor an expansionary effect on the economy.
“Inflation has decreased considerably,” Fed Chair Jerome Powell said at the end of the latest monetary policy meeting,but “the job is not done yet,” he said.
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How can individuals and families effectively manage their finances during periods of rising inflation?
Interview: Understanding the Current State of Inflation in the USA with Dr. Emily Carter, Economic Expert
Time.news Editor: thank you for joining us today, Dr. Carter.With the latest consumer data indicating that inflation in the USA has risen to 2.3% for October, what do you think are the primary factors driving this increase?
Dr. Emily Carter: Thank you for having me. The recent rise in inflation can primarily be attributed to the services sector, which experienced a important price increase of 3.9% compared to last year. Additionally, the anticipated tariff increases promised by Donald Trump have raised concerns about potential price escalations across various goods and services. While goods overall saw a decline in prices by 1% over the past year, the pressure from services continues to shape the inflation landscape.
Time.news Editor: That’s insightful. Its interesting to note that American family income saw a rise of 0.6%, which is more than the previous month. How do you interpret this trend in relation to consumer spending?
Dr. Emily Carter: Indeed, the increase in family income is a positive sign, allowing families to keep up with rising costs. However, the growth in expenses only increased by 0.4% in October, down from 0.6% in September. This suggests that while incomes are improving, consumers may be becoming more cautious about spending as inflation persists. This cautious approach could influence demand in the economy going forward.
Time.news Editor: You mentioned the Federal Reserve’s dual mandate of controlling inflation and maintaining full employment. How do you see their recent actions, especially the two rate cuts, impacting the current economic climate?
Dr. Emily Carter: The Fed’s decision to cut interest rates to a range of 4.50% to 4.75% indicates a shift toward greater flexibility to support economic growth. By lowering the cost of credit, they aim to stimulate consumption and investment to balance the inflationary pressures. However, Fed chair Jerome Powell’s remarks about the job not being done yet signal caution; while inflation has decreased, they remain vigilant about potential economic risks.
Time.news Editor: With core inflation rising to 2.8% from 2.7% and the broader CPI also showing a slight uptick, should consumers expect any changes in their daily lives?
Dr. Emily Carter: Consumers should remain aware of the ongoing fluctuations in inflation rates. Core inflation, particularly, excludes volatile food and energy prices, highlighting underlying pressures that might affect everyday expenses. While inflation is close to the Fed’s 2% target,any sustained increases could reflect on their purchasing power and household budgets in the coming months.
Time.news Editor: What practical advice would you offer to individuals and families navigating this inflationary surroundings?
Dr. Emily Carter: I would advise families to monitor their budgets closely and prioritize essential spending.Given that some prices are stabilizing or even declining in goods, consumers might benefit from being strategic about their purchases. Also, keeping an eye on interest rates may help individuals decide when to borrow or invest.staying informed about Federal reserve announcements and economic indicators can empower consumers to make financially sound decisions.
Time.news Editor: Thank you,Dr.Carter, for your valuable insights on the current inflation situation in the USA. It’s clear there are multiple factors at play, and understanding them is crucial for making informed financial decisions.
Dr. Emily Carter: Thank you for having me. It’s essential for consumers to stay informed as economic conditions evolve, and I encourage everyone to continue to educate themselves about these vital issues.