US inflation measure PCE remains at 3.4 percent

Dusseldorf. The price index for personal consumption expenditure (PCE) remained at 3.4 percent in August. The US Department of Commerce announced this on Wednesday. The PCE is the preferred inflation measure of the US Federal Reserve (Fed). The core PCE rate, which excludes the more volatile prices for food and energy, is 3.0 percent.

The index measures how much private households in the US actually spend on goods and services - and how these prices change. Unlike the Consumer Price Index (CPI), which is considered the official U.S. inflation rate, the PCE also takes into account expenses that are not directly paid by households, such as employer health insurance benefits.

U.S. statisticians made a major revision of past data points in September, which typically happens once a year. The revised values ​​for July and June are now 3.4 and 3.5 percent; previously the tables were 3.7 percent. What at first glance looks like a price drop is actually not.

The new figures nevertheless provide some relief on the bond markets. Yields on ten-year and two-year US bonds fell slightly after the publication. Yields had previously risen again: 30-year US government bonds were trading at up to 5.62 percent on Tuesday morning, their highest level since 2002, and ten-year bonds also approached this value.

Inflation, on the other hand, was 3.4 percent for the year in August and July and was still at 3.5 percent in June. It is driven by crude oil prices. These remain at a high level - as there is no prospect of long-term easing of the Middle East conflict.

The North Sea Brent variety for delivery in November rose by a good one percent to just under $104 per barrel (159 liters), US light oil WTI for delivery in November rose by half a percent to around $90 per barrel. Even though energy prices are excluded from core inflation, they now also affect many other areas, so they are also reflected in core data.

In order to counteract high inflation, the Fed raised interest rates in mid-September for the first time in three years, which are now in a range of 3.75 to 4.00 percent. There is also speculation on the futures markets that there will be a further interest rate increase in December.