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The headline rate of inflation in the US was 2.1% in September, according to new Bureau of Economic Analysis figures released Thursday — close to the Federal Reserve’s target of 2% and the lowest since February 2021.
The seasonally adjusted personal consumption expenditures price index, one of the central bank’s preferred economic indicators, rose 0.2% during the last month. The core PCE, which doesn’t include volatile food and energy prices, increased 0.3%.
Despite many Americans reporting that they feel crushed by high prices, consumer spending increased, likely driven by higher wages, Bloomberg wrote. There was also a decline in saving, the outlet noted, which likely “helped prop up spending throughout the third quarter.” Overall, the numbers “offer mixed news for voters seeking to get a sense of where the economy stands heading into the Nov. 5 presidential election, with consumers continuing to spend even as inflation lingers.”
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The numbers come as the Fed prepares for its November meeting, where it is widely expected to lower interest rates by 0.25%, following a similar rate cut in September.
While the headline numbers are positive, this is “no clear victory” for the Fed, finance-focused outlet Investopedia noted: Core inflation remained at 2.7%, unmoved since August. “With the Fed’s attention rotating more toward the full-employment aspect of its dual mandate,” Bloomberg wrote, “we think the steady annual core inflation measure won’t sway the Fed from its rate-cutting path.”