US Core Inflation Hits 30-Year High... Reverses Due to Increased Personal Spending

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The Personal Consumption Expenditures (PCE) price index, which the U.S. Federal Reserve (Fed) refers to when making monetary policy decisions, continued its high-level surge. Despite rising inflation, personal spending has returned to an upward trend.

According to the U.S. Department of Commerce on the 1st, the August PCE rose 4.3% compared to the same period last year. This is a slight increase from 4.2% in the previous month. The PCE growth rate rose by 2 percentage points in five months, from 2.3% in March.

The core PCE inflation rate, which excludes food and energy, reached 3.6%. Although the core PCE inflation rate was at the same level as the previous month and the upward trend slowed, CNBC reported that the core PCE inflation rate was the highest in 30 years since May 1991.

The core PCE increased by 0.3% from the previous month, exceeding the market expectation of 0.2%.

Personal spending increased by 0.8%, slightly surpassing the expected 0.7%. Personal spending returned to an upward trend in August after decreasing by 0.1% in July.

Despite persistent inflation, the increase in personal spending is seen as a positive sign. The Wall Street Journal predicted that consumers, who increased their savings during the COVID-19 period and benefited from wage increases, will continue to show strong consumption for the time being.

Consumption is a key growth driver, accounting for two-thirds of the U.S. economy.

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