New York, NY – The latest data on personal consumption expenditures (PCE) price index shows a drop to 2.1% on an annual basis last month, nearing the Federal Reserve’s target of a 2% annual rate. This decrease in inflation could pave the way for more rate cuts in 2024, as suggested by Wall Street economists. The PCE data for September aligns with economists’ forecasts and marks a decline from August’s rate of 2.3%. This information comes from data provided by the Commerce Department.
The decrease in inflation is seen as a significant achievement, especially in the wake of post-pandemic inflation surges. The Federal Reserve’s first rate cut in four years in response to inflation nearing its 2% goal has provided relief for consumers with credit card debt or those seeking loans. The Chief Economist at EY, Gregory Daco, noted that the latest PCE data is the index’s lowest reading since February 2021. Daco anticipates the Fed will continue easing policy through June next year to maintain growth and address labor market trends.
While inflation has decreased, prices remain higher than desired for many U.S. consumers. The cost of living has continued to be a concern, with the upcoming election on November 5 heightening public awareness of the issue. The PCE index, along with other inflation measures such as the Consumer Price Index, tracks changes in prices over time for a typical basket of goods and services. However, consumers often perceive inflation based on the prices they encounter at stores.
Despite the progress made in curbing the rise in prices through high interest rates, many Americans still express dissatisfaction with current living costs. Some individuals perceive the inflation rate to be significantly higher than it actually is, reflecting ongoing concerns about the impact of rising prices on daily expenses. With proposals from political candidates aimed at addressing costs for essential items like food and gas, the issue of inflation remains a prominent topic of discussion for voters.
In conclusion, the latest data on the PCE price index reflects a decrease in inflation rates, potentially signaling further rate cuts by the Federal Reserve. While progress has been made in controlling rising prices, consumer concerns about the cost of living persist, shaping public discourse ahead of the upcoming election. With both economic and political implications, the issue of inflation continues to be a focal point for policymakers and the public alike.