Consumers spent a bit more in August than the previous month, a sign the economy is holding up even as inflation lifts prices for food, rent, and other essentials.
Americans boosted their spending at stores and for services such as haircuts by 0.4% in August, after it fell 0.2% in July, the Commerce Department said Friday Sept. 30. – Consumers spent a bit more in August than the previous month, a sign the economy is holding up even asAmericans boosted their spending at stores and for services such as haircuts by 0.4% in August, after it fell 0.2% in July, the Commerce Department said Friday.
. But many economists lowered their forecasts after the spending report and now expect growth will be just 1% or so at an annual rate. Compared with a year ago, prices jumped 6.2%, down from a 6.4% annual gain in July but not far from June's four-decade high of 7%. The figure is lower than the more widely-known consumer price index, released earlier this month, which reported an 8.3% price gain in August from a year earlier.
Those figures were higher than expected, and may make the Federal Reserve more likely to lift its benchmark interest rate by another hefty 0.75 percentage point at its next meeting in November. If so, that would be the fourth such hike in a row., with core prices rising more quickly than headline inflation. Falling gas prices have reduced overall inflation, while stubbornly high costs for housing, cars, and services such as health care and hair cuts have pushed core prices higher.
Fed Chair Jerome Powell and other officials have repeatedly underscored the Fed’s determination to bring prices down, even if their rate hikes result in layoffs and a higher unemployment rate.
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