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Inflation Is Moderating, but Still High

By NAM News Room

Prices remained high in October as the personal consumption expenditures deflator rose slightly, according to the Bureau of Economic Analysis. Moutray gave us the details.
What it is: The PCE deflator is a measure of inflation based on changes in personal consumption by people living in the United States or those buying on their behalf. It can be used to gauge inflation or deflation and to offer information about consumer behavior.

What we’re seeing: “The PCE deflator rose 0.3% in October for the third straight month,” said Moutray.

  • “Excluding food and energy prices, the PCE deflator increased 0.2% in October, easing from 0.5% growth in the previous two months.”

The long view: “Overall, the PCE deflator has risen 6.0% over the past 12 months, down from 6.3% year-over-year in September,” said Moutray. “This figure has decelerated somewhat from the 7.0% year-over-year pace in June, which was the strongest since December 1981.”
What it means: “Inflation continued to be a major concern in the economy, tied with workforce challenges and closely following supply chain issues in the latest NAM Manufacturers’ Outlook Survey ,” said Moutray. “The good news is that pricing pressures are moderating somewhat in recent months, but costs continue to rise at solid paces.”

What’s next: “The Federal Open Market Committee is likely to step down to a 50-basis-point rate increase at the conclusion of its Dec. 13–14 meeting,” predicts Moutray.

  • “The Fed will likely further increase the federal funds rate by 50 or 75 basis points in total at its Jan. 31–Feb. 1 and March 21–22 meetings before hitting the pause button.”
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