• September inflation in the United States was 3.7%, a slight drop from the previous year.
• Core PCE index increases by 0.3% month-over-month, in line with economist expectations.
• The stable overall inflation rate was influenced by a surge in energy prices.
• Consumer spending in September showed resilience, but concerns arise over its sustainability.
• Mixed signals for the U.S. economy’s direction, with hints of disinflation and strong economic growth.

September’s inflation figures in the United States have been released, providing valuable insights into the economy’s current state and future prospects.

Core PCE Index Holds Steady

The core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure, registered a 3.7% inflation rate, slightly lower than the previous year. Notably, it excludes volatile factors like food and energy prices. The month-over-month data indicated a 0.3% increase, aligning with economists’ expectations, showcasing gradual progress.

The Impact of Energy and Food Prices

The overall PCE inflation rate, including food and energy, remained stable at 3.4% year-over-year. Energy prices surged by 1.7%, while food prices increased by 0.3% month-over-month. These factors contribute to the complex inflation landscape.

In September, consumer spending showed resilience, rising by $138.7 billion (0.7%). Service industries, including international travel and healthcare, played a significant role in this increase. Non-durable goods also saw gains. However, there are concerns about the sustainability of this spending pattern, as it outpaces income growth.

Economic Growth and Interest Rates

While the data hints at disinflation, a 4.9% economic growth rate in the third quarter presents challenges. Higher interest rates may be necessary, making the Federal Reserve’s strategy a focal point for investors and economists.