2024-01-26 13:45:15
(Washington) Inflation in the United States, a major subject of the electoral campaign and the speeches of Joe Biden and Donald Trump, remained stable in December over one year, but the rise in prices excluding food and energy fell to the lowest low since March 2021.
The price increase remained 2.6% in December, compared to December 2022, according to the PCE index, a gauge favored by the American central bank (Fed), published Friday by the Commerce Department.
The Fed wants to bring this index down to 2%.
Over one month, however, inflation started to rise again, with prices increasing by 0.2% compared to November, as expected, while they had fallen by 0.1% between October and November.
But excluding food and energy, so-called “core” inflation fell to 2.9%, its lowest level in almost three years.
It is even lower than the objective of 2% evolving over three and six months at an annualized rate, that is to say if the rate observed over these periods was projected over a full year. Which means the Fed’s goal is now within arm’s reach.
“As more Americans feel more confident in the economy, my goal remains to do everything in my power to reduce costs for families,” President Joe Biden said.
Rising prices will be a key factor in the November presidential election. Former President Donald Trump, in a good position to be the Republican candidate against the Democratic president, regularly accuses his policies of fueling inflation.
” The way in which [les] Undecided voters will perceive inflation, among other economic developments, will likely determine the election,” explains Bernard Yaros, economist for Oxford Economics, in a note.
“Mastered”
Joe Biden also promised to “fight attempts by extremist Republicans to distribute massive giveaways to the rich and big businesses, while increasing the cost of prescription drugs and cutting pensions and [les programmes de santé pour les plus âgés et les plus pauvres] ».
“Inflation is now under control,” US Treasury Secretary Janet Yellen said on Thursday, adding that “if inflation remains low, [les Américains] will begin to regain confidence in the economy.
PHOTO KAMIL KRZACZYNSKI, AGENCE FRANCE-PRESSE
US Treasury Secretary Janet Yellen
Furthermore, household income increased a little slower in December than in November, at 0.3% compared to 0.4%, the Commerce Department said.
But their spending increased more quickly, driven by end-of-year holiday purchases, to 0.7% compared to 0.4%.
Inflation that finally decides to return to its 2% objective would allow households to regain purchasing power and have easier access to credit.
Lower rates
PCE inflation is particularly watched by the American central bank (Fed), which wants to reduce it to 2% over one year, and will hold its monetary policy meeting on Tuesday and Wednesday.
It is not yet expected to touch interest rates, which have been in the range of 5.25 to 5.50% since July, but forecasts several cuts in 2024.
This movement could begin “by the middle of the year”, estimates Rubeela Farooqi, chief economist for HFE, and “an earlier start cannot be ruled out if inflation reaches the target by the end of the first trimester or the beginning of the second trimester.
Another measure, the CPI index, on which pensions are indexed in the United States, started to rise again in December, to 3.4% over one year.
The American economy has defied predictions of recession in 2023, with GDP growth even accelerating compared to 2022, to 2.5% compared to 1.9%.
Growth in the fourth quarter alone was much stronger than expected, at 3.3% annualized – a measure favored by the United States, which compares GDP to that of the previous quarter then projects the development over the whole year at this rate.
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