Inflation in the United States has not been reduced even by three huge steps by the US central bank in a row (a Fed rate increase of 0.75 percentage points at a time). Inflation in the euro area (19 countries that use the euro) is at an all-time high.
The US Department of Commerce announced on the 30th (local time) that the US personal consumption price expenditure index (PCE) rose 6.2% year on year in August. The rate of increase from the same month of the previous year fell slightly from July (6.4%), but jumped 0.3% from the previous month, breaking out of July’s decline (-0.1%) and turning up again.
Core PCE, which excludes volatile foods and energy, also rose from the previous month, defying expectations that inflation would have ‘peaked’. US core PCE rose 4.9% in August compared to the same month a year ago, according to the Commerce Department. It was up 0.6% from the previous month. It beat all the estimates compiled by the Dow Jones. Experts predicted that the core PCE would rise by 4.7% and 0.5%, respectively, compared to the same period last year. The core PCE is the Fed’s most important inflation indicator.
Fed Vice Chairman Rayle Brainerd, the Fed’s ‘Number 2’, also said that inflation should not be ruled out, suggesting that the Fed’s tightening policy will not change for now.
In the euro area (19 countries that use the euro), the growth rate of the consumer price index (CPI) in September reached the highest since the establishment of the European Union (EU). Eurostat, the EU’s statistical body, announced on the 29th (local time) that the euro area CPI rose by 10% in September compared to the same month last year. This is the highest level since Eurostat began collecting statistics in 1997. This is the first time that the rate of increase compared to the same month last year has been in double digits. It was also higher than the market estimate (9.7%).
Energy prices have had the biggest impact on Eurozone inflation in September. During this period, energy prices increased by 40.8% compared to a year ago. After Russia invaded Ukraine, natural gas prices increased in Europe. Food, alcohol and tobacco prices rose by 11.8 per cent over the same period. Industrial products rose 5.6%, and service prices rose 4.3%.
Excluding energy and food, which have high price volatility, the core CPI rose 4.8% from the same month last year. It was steeper than the rate of increase (4.3%) in August.
Markets believe the European Central Bank (ECB) is likely to raise the key interest rate by 0.75 percentage points at its October 27 meeting.
Reporter Joo-yeon Park/Leo Go-woon grumpy_cat@hankyung.com
