An inflation gauge that's closely monitored by the Federal Reserve showed price increases remained elevated in September amid brisk consumer spending and strong economic growth.
People talk near a 2024 Cooper S convertible on the floor of a Mini dealership Saturday, Oct. 21, 2023, in Highlands Ranch, Colo. On Friday, the Commerce Department issues its September report on consumer spending. – An inflation gauge that is closely monitored by the Federal Reserve showed price increases remained elevated in September amid brisk consumer spending and strong economic growth.
September’s month-to-month price increase exceeds a pace consistent with the Fed’s 2% annual inflation target, and it compounds already higher costs for such necessities as rent, food and gas. The Fed is widely expected to keep its key short-term interest rate unchanged when it meets next week. But its policymakers havethat stronger growth could keep inflation persistently high and require further rate hikes to quell it.
On Thursday, the government reported that strong consumer spending drove the economy to a robust 4.9% annual growth rate in the July-September quarter, the best such showing in nearly two years. Heavy spending by consumers typically leads businesses to charge higher prices. In Friday’s report on inflation, the government also said that consumer spending last month jumped a robust 0.7%.
A key reason why the Fed may keep rates unchanged through year's end is that September's 3.7% year-over-year rise in core inflation matches the central bank's forecast for this quarter.
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Inflation at 3.4% in September in Fed’s preferred gaugeZachary Halaschak is an economics reporter at the Washington Examiner. Before moving to Washington, he worked in Alaska, covering politics, government, and crime for the Ketchikan Daily News. While there, Zach won the Alaska Press Club’s second-place award for best reporting on crime or courts for his coverage of a local surgeon’s alleged murder.
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