Prices: Important US inflation measure rises – pressure on Fed grows

Dusseldorf. The US Federal Reserve's most important measure of inflation continued to rise in September. The index for personal consumption expenditure, or PCE for short, showed inflation of 3.6 percent compared to the previous year, as the statisticians from the Bureau of Economic Analysis announced on Thursday. In August they determined a value of 3.4 percent.

This increases pressure on the Federal Reserve (Fed) to raise key interest rates at the upcoming meeting in December in order to get closer to the inflation target of two percent. It was only on Wednesday that the Fed left interest rates unchanged and announced that it would wait for further fresh data. According to data from the CME futures exchange, 86 percent of market participants currently expect the Fed to raise interest rates by 0.25 percentage points before the end of the year.

The core rate of the PCE index, which excludes the more volatile prices for food and energy, also rose slightly to 3.1 percent. In August it was still at 3.0 percent. Using the core rate, observers try to determine to what extent the persistently high prices for oil, fuel and gas caused by the Iran war are affecting the overall economy. The stronger the price effects are in other sectors, the more persistently high inflation rates are likely to remain.

At the same time, the statisticians published their first estimate of the development of the US economy in the third quarter. This grew by an annualized 3.4 percent – ​​the highest value in a year.

Gross domestic product (GDP) data is published annualized in the USA. This means that experts assume that the growth in one quarter lasts for a whole year. To make the growth rates approximately comparable to those in Europe, the US rate is divided by four.