Ethiopia: Loan from United Nations Fund Allows Food and Agriculture Organization (FAO) to Scale Up Fertilizers for Farmers in TigrayRead more How Choosing the Right Printer Helps Small Businesses and Content Creators to Save Time, Maximise Productivity and Achieve GrowthRead more The United States Contributes USD $223 Million to Help World Food Programme (WFP) Save Lives and Stave Off Severe Hunger in South SudanRead more Eritrea: World Breastfeeding WeekRead more Eritrean community festival in Scandinavian countriesRead more IOM: Uptick in Migrants Heading Home as World Rebounds from COVID-19Read more Network International & Infobip to offer WhatsApp for Business Banking Services to Financial Institution Clients across AfricaRead more Ambassador Jacobson Visits Gondar in the Amhara Region to Show Continued U.S. Support for the Humanitarian and Development Needs of EthiopiansRead more Voluntary Repatriation of Refugees from Angola to DR Congo ResumesRead more Senegal and Mauritania Are Rich in Resources, Poor in Infrastructure, Now Is the Time to Change That Read more

US prices rose 4.2% in July from year-ago: govt data

show caption
The latest high inflation data could up the pressure on the Federal Reserve to roll back its easy money policies./AFP
Print Friendly and PDF

Aug 28, 2021 - 06:42 AM

WASHINGTON — A key US inflation gauge continued to climb last month and income shot higher as the economy bounces back from last year’s downturn, according to government data released Friday.

The personal consumption expenditures (PCE) price index rose at a rapid 4.2 percent pace in July compared to the same month in 2020, slightly faster than the rate in June, the Commerce Department said.

Meanwhile, income rose 1.1 percent compared to the month prior, far above expectations, but spending cooled to 0.3 percent, in what analysts viewed as a consequence of the fast-spreading Delta variant of Covid-19 making some consumers hesitant.

“While pandemic fatigue is setting in and leading to strong emotional responses, we believe cooler consumer spending growth is more likely than consumers retrenching and the economy going into reverse,” Lydia Boussour of Oxford Economics said.

The Commerce Department credited the spike in incomes to government policies like the expanded Child Tax Credit approved in President Joe Biden’s March stimulus package, while increases in employee compensation also played a role.

While the US economy is generally on the upswing, the return to normalcy is complicated by supply bottlenecks as well as labor shortages that have pushed some employers to hike wages.

That’s caused inflation to spike, with July’s increase above the four percent year-on-year jump seen in June.

With the Federal Reserve using PCE as its preferred measure of price increases, the data could up pressure on them to roll back their easy money policies.

Spending was much lower than the 1.1 percent advance in June, with consumers increasing services spending by $102.6 billion but decreasing goods spending by $60.4 billion.

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.