Inflation Continues to Decline, Surpassing Projections.

(VOR News) – A study published by the Bureau of Economic Analysis on Friday shows that although on an annual basis the measure of inflation regularly tracked by the Federal Reserve dropped more than expected, in August it showed a minor increase.

The report’s presentation of this data was Direct results of this event were people’s expectations on the Federal Reserve’s desire to drastically lower interest rates grew.

Beginning the month, the price index for personal consumption expenditures rose 0.1% then by 2.2% annually from the start of the month. Although this is less than the projected 2.3%, it is also less than the 2.5% rate noted in July.

Apart from the cost of food and energy, the core index gained 0.1% month-on-month. Conversely, the average annual rate showed a notable rise from 2.6% the month before to 2.7%.

August electricity price inflation dropped 0.8%, indicating an improvement.

Though it is not as well-known as the consumer price index, Federal Reserve Chairman Jerome Powell is a big proponent of the PCE. The Federal Reserve lowered interest rates by fifty basis points and declared that it was certain that inflation was under control. A little over a week has passed since the Fed made those announcements before this report.

“Friday’s weaker-than-expected PCE data increases the likelihood that the Federal Reserve will cut interest rates at both the November and December meetings,” states Bellwether Wealth President and Chief Investment Officer Clark Bellin.

As the chief investment officer of Bellwether Wealth put it, this is just one more piece of evidence showing that interest rates don’t have to be that much higher than the rate of inflation.

The Federal Reserve made the right move last week when it decided to lower interest rates by a more significant 50 basis points than was initially projected, based on data from the Consumer Price Index that was announced on Friday.

This is due to the possibility that the economy may suffer if interest rates are kept at an unreasonably high level for an extended length of time.

A day after the government presented its final estimate of second-quarter GDP growth, the report was made public. Concurrently, the government increased the rate of economic growth for the 2021–2023 era.

Inflation occurred as the country recovered from the COVID-19 pandemic.

The country’s savings rate and income growth were both higher than previously estimated, according to the revisions, indicating that consumers may still have the wherewithal to make purchases.

According to Inflation Cetera Investment Management’s chief investment officer, Gene Goldman, data has been coming in stronger than anticipated since July.

Vice President Kamala Harris might benefit from the economy, which has done better than expected, as she strives to succeed President Joe Biden in the White House. In the event that Harris defeats former President Donald Trump in November, she stressed on Wednesday that she will handle the economy in a “pragmatic” manner.

She proposed a plan that included raising the tax deduction cap for business owners, giving first-time homebuyers financial incentives, and supporting initiatives aimed at advancing manufacturing and sustainable energy.

Harris is still having trouble with inflation because a lot of Americans believe that the Biden administration is to blame for the price increases that have occurred over the last three years.

Prices are still rising for most goods compared to before the pandemic, even though they are not rising as quickly as they did in 2022, when consumer inflation was rising at a rate of 9% annually.

According to a comment from Allianz Trade’s chief economist for North America, Dan North, “inflation continues to accumulate over time.” It started in 2021, and prices went up after that.

SOURCE: US

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