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Washington: Consumer price inflation slowed in the United States in October to 6 percent at an annual rate, compared to 6.3 percent in September, according to the personal consumption expenditures index approved by the US Federal Reserve, whose figures were published by the Department of Commerce on Thursday.
Inflation remained stable at 0.3 percent on a monthly basis, surprising analysts who had expected a slight acceleration of 0.4 percent.
Inflation, which has been recorded for a year at very high levels unprecedented since the early eighties, is the priority of the Federal Reserve, which has increased its basic interest rates in an effort to slow consumption and thus the economy, which will allow alleviating pressure on prices.
The personal consumption expenditures index is the main indicator used by the Federal Reserve to measure inflation, and it seeks to reduce it to 2%, which is considered a healthy level for the economy.
The consumer price index approved especially for aligning retirement pensions with prices, whose figures were released two weeks ago, also reflected a slowdown in inflation to 7.7% at an annual rate, compared to 8.2% in September, retreating to its lowest level since January 2022. .
On the other hand, household incomes increased in October by 0.7 percent compared to the previous month, according to the government, an increase that exceeded expectations and was higher than in September (0.4 percent). This increase resulted from higher wages as well as social and state aid.
Americans’ spending also accelerated, increasing by 0.8%, according to analysts’ expectations, compared to +0.6% in September.
Americans spent on gasoline and cars, as well as on food and housing.
“Consumer expenditures remain resilient in the face of inflation at its highest level in forty years and an increase in the cost of borrowing,” said Rubila Farooqi, head of economics at the HFE Institute.
However, these consumer expenditures on products and services are supposed to support US growth, which rebounded in the second quarter after recording a contraction in the first half of the year.
And what supports consumption is the holiday season, which kicked off strongly with the annual sales, Friday and Monday.
Sales for the entire season are expected to increase between 6 and 8 percent compared to last year to $960.44 billion, according to the National Distribution Federation.
However, deflationary risks still hang over the US economy.
But the head of the Federal Reserve, which is fighting high inflation by raising the cost of borrowing at the risk of slowing the economy and causing deflation, expressed optimism on Wednesday.
Jerome Powell believed that it was “very likely” that the US economy would reach a “soft landing” that would return inflation to an acceptable margin without triggering deflation.