Consistently high inflation in the US does not appear to have a negative effect on consumer behaviour.
Despite persistently high inflation, US consumers are spending more money than expected. And they increased their spending in September by 0.6% from the previous month, the Commerce Department announced Friday in Washington. Economists polled by Reuters had expected a gain of just 0.4%, down from an upwardly revised 0.6% increase in August. With their spending, consumers are the mainstay of the US economy, which accelerated again in the summer, also thanks to Americans’ willingness to buy.
In light of persistently high inflation in the country, consumer sentiment has recently clouded significantly. The inflation rate in the USA has recently reached 8.2%, which has eroded the purchasing power of citizens. One measure of inflation that the US Federal Reserve watches closely is consumer personal spending. This does not include food and energy costs, which fluctuate significantly. This so-called core PCE index rose to an annualized inflation rate of 5.1% in September. In August it was 4.9%. However, experts now expected a stronger increase to 5.2%.
The US Federal Reserve is raising interest rates by leaps and bounds due to rising inflation. It faces an unusually sharp fourth rise of 0.75 percentage points in a row: the central bank may raise its key interest rate to a range of 3.75-4% next week.