Key Inflation Measure Climbs 6.2 Percent Over Year Through August
Despite the Federal Reserve raising interest rates five times this past year, inflation continues to be much higher than the central bank’s 2 percent target.
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The Personal Consumption Expenditures inflation measure, which was released Friday, showed the index rose last month by 6.2 percent from a year ago, which was slightly down from 6.4 percent in July.
Prices for goods increased 8.6 percent and prices for services increased 5.0 percent. Food prices increased 12.4 percent and energy prices increased 24.7 percent. Excluding food and energy, the PCE price index increased 4.9 percent from one year ago, the statement read.
“Inflation is very high in the United States and abroad, and the risk of additional inflationary shocks cannot be ruled out,” Lael Brainard, the Fed’s vice chair, said in a speech Friday. She said monetary policy will need to be “restrictive for some time.”
“We are committed to avoiding pulling back prematurely,” she said.
The central bank employed its fifth interest rate increase of 2022 this month and its benchmark funds rate is now in the range of 3 percent to 3.25 percent. The increases have yet to show any impact on the rate of inflation.
The core PCE came in at 4.9 percent year-over-year, which was higher than anticipated by The Street, which expected the rate to come in around 4.7 percent year-over-year.
Jerome Powell, the Fed Head, said at a meeting earlier this month that the central bank, which downplayed inflation as a risk for months, “is strongly resolved to bring inflation down to 2 percent and we will keep at it until the job is done.”
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