consumption on the rise despite high inflation

Washington (awp / dpa) – US households continued to consume in October, despite inflation at the highest in 31 years, which however inflated their spending, according to data from the Department of Commerce released Wednesday.

Household spending climbed 1.3% in October compared to September against 0.6% last month, while analysts saw them remain stable.

The Americans mostly bought goods, especially cars.

Excluding inflation, the increase in spending is more modest, 0.7%, against 0.3% in September.

Consumer prices have, in fact, continued their escalation in October in the United States, up 5% over one year, their largest increase since 1990, according to the PCE index of the Commerce Department also released Wednesday.

The prices of energy alone have soared by 30.2% compared to October 2020, those of food soared by 4.8%. And excluding these two categories, so-called core inflation stands at 4.1%.

These figures confirm the acceleration observed ten days ago, with the publication of another measure of inflation, the CPI index, which had shown a price increase of 6.2% year on year, to the highest since November 1990.

The PCE index is the one favored by the American central bank (Fed).

Inflation is also accelerating over a month, according to the PCE index, to 0.6%, as expected, from 0.4% in September. Underlying inflation is also picking up speed, at 0.4% versus 0.2%.

In addition, household income increased by 0.5% compared to September, a stronger increase than the 0.2% expected, and which follows a decline of 1% last month, when exceptional unemployment benefits related to the pandemic had expired.

This increase in income “mainly reflects increases in employee compensation”, but also the increase in income from assets, including stock market, said the Department of Commerce in its press release.

Indeed, employers who struggle to recruit, offer higher salaries to attract candidates. On the other hand, the exceptional unemployment benefits paid continued to decrease.

By consuming, households also dig into their savings, which are decreasing. It now represents 7.3% of disposable income, against 7.5% in September, far from the 26.6% of March 2021, after the payment of stimulus checks by the federal government.

afp / al

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