2023-11-30 13:58:33
(Washington) Inflation continued to slow in October in the United States, falling to 3.0% year-on-year, compared to 3.4% in September, the lowest since spring 2021, according to the PCE index, gauge favored by the Fed, and published Thursday by the Commerce Department.
Over one month, prices remained stable in November, after increasing by 0.4% the previous month. This is better than expected, since analysts forecast a slight increase of 0.1%, according to the Briefing.com consensus.
This measure of inflation is progressing in the same direction as another index, the CPI, published earlier in the month, and on which American pensions are notably indexed.
This, in fact, slowed down in October, to 3.2% over one year, compared to 3.7% in September, thanks in particular to the drop in gasoline prices at the pump. Over one month, the CPI index also fell to zero, with prices identical to those of September.
And even so-called core inflation, which excludes food and energy, and has driven prices up for months, fell in October. It fell to 0.2% over one month and 3.5% over one year.
To slow inflation, the American Federal Reserve (Fed) has gradually increased its rates since March 2022. This makes access to credit more expensive for households and businesses, encouraging them to consume or invest less.
And in fact, households significantly slowed down their spending in October, it only increased by 0.2%, compared to 0.7% the previous month. Their income increased by only 0.2% in October, compared to 0.4% in September.
“The slight increase in consumer spending in October […] confirms that real consumption growth is on track to slow in the fourth quarter,” commented Michael Pearce, economist for Oxford Economics, in a note.
These figures, published two weeks before the next meeting of the American central bank (Fed), should weigh in the balance in favor of maintaining rates at their current level.
Economic downturn
Inflation, however, remains above the 2.0% target.
“We expect further steady progress in services inflation over the next year to bring core inflation below 2.5% by the end of next year, which, in our opinion, will allow the Fed to start reducing its rates,” Michael Pearce anticipates.
This will involve an economic slowdown expected from the 4the quarter of this year, after still very vigorous growth during the summer.
“Growth is expected to slow but remain positive, and inflation is expected to slow further, which is a positive development for Fed officials,” commented Rubeela Farooqi, chief economist for HFE.
According to her, “the Fed’s next action will be a rate cut, probably by the middle of next year.”
Fed rates are currently in the 5.25-5.50% range, since July.
The Fed left them at this level during its September and November monetary meetings, so as not to weigh too heavily on economic activity, because the full effects of rate hikes take time to be fully felt in the economy. real economy.
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