Inflation eases slightly in September as personal income drops
Inflation stayed largely flat in September as the expiration of federal unemployment aid caused a sharp decline in household incomes, according to data released Friday by the Commerce Department.
The personal consumption expenditures (PCE) price index rose 0.3 percent last month, according to the Bureau of Economic Analysis (BEA), after rising by the same rate in August.
Monthly inflation minus food and energy prices, which are more volatile, declined to 0.2 percent in September after rising 0.3 percent in August. The annual inflation rate in September did tick higher to 4.4 percent in September from 4.2 percent in August, but stayed flat at 3.6 percent without food and energy prices.
The lack of a significant increase in price growth is a welcome sign for President Biden and Democrats, as they face growing concerns from voters and backlash from Republicans over high inflation. While price growth is expected to continue falling as the economy shakes off the delta surge, inflation has run higher and for longer than many economists had anticipated earlier this year.
Personal incomes declined by 1 percent last month Analysis (BEA), after pandemic jobless aid programs expired Sept. 6. More than 7 million Americans lost the entirety of their unemployment aid and millions more lost crucial income when the $300 weekly supplement lapsed as well.
Disposable personal income dropped sharply, falling 1.3 percent last month after an August gain of 0.1 percent. Even so, personal consumption expenditures—a measure of consumer spending—rose 0.6 percent in September, down from a 1 percent increase in August.
“As we approach 2022, the economy is regaining momentum. An improving health situation, rising mobility, improving employment trends and solid household finances should support consumer spending growth,” wrote Lydia Bossour of Oxford Economics in a Friday analysis.
“Next year, stronger compensation should alleviate the loss of fiscal support as slowly easing supply chain constraints reduce the upward pressure on inflation – thereby providing a lift to consumer outlays.”
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