The rate of U.S. inflation is slowing, but it’s not going to slow as quickly as earlier in the year.
The so-called core PCE price gauge, the Federal Reserve’s inflation tracker, is expected to show a 0.3% increase in September. The core rate, which omits food and energy, is seen as a better predictor of future inflation than the headline PCE index.
The headline PCE index that includes food and energy is also forecast to rise 0.3%, according to Wall Street
DJIA
analysts.
The Fed would prefer to see inflation rise no more than 0.1% to 0.2% a month.
The annual rate of core inflation, meanwhile, is likely to fall slightly, to 3.7% from 3.9%.
Inflation has decelerated from a 40-year high of 5.6% a year and a half ago.
However, prices are still rising almost twice as fast as the Fed’s goal of 2% inflation, and progress is likely to happen at a much slower rate in the months ahead.
The Fed itself doesn’t think it will reach its 2% target until 2026.
As long as inflation continues to slow, however, the Fed is less likely to raise interest rates. The central bank, which is set to meet next week, is widely expected to leave rates unchanged to give it more time to assess the economy.
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