Inflation in the US is showing only faint signs of slowing down, prices may even have started to rise again in September, much to the chagrin of Joe Biden, who recently admitted the possibility of a recession in the near future. Figures for September will be published on Thursday at 14:30 French time.
CPI inflation, which is referred to and used, in particular, to index pensions, could have continued to slow for a year, down to 8.1% from 8.3%. But the rate is expected to rise in a month, to 0.3% from 0.1% in August, according to MarketWatch analyst consensus.
An important issue for the midterm elections
In August, the numbers had been disappointing: inflation had slowed less than expected in a year, thanks mainly to falling gasoline prices at the pump. Apart from this thinning, the increase in prices had been generalized, in particular for rentals and food products. For a month, prices had risen again, while they remained stable between June and July.
This increase in the cost of living in American households is a strong argument for opponents of Democratic President Joe Biden, a month before the mid-term elections that will lead to the renewal of some of the elected members of Congress. The slim majority of the presidential field is at stake.
The Fed prefers to act with “firmness” than with “too timid”
Joe Biden admitted on Tuesday that it was “possible” that the United States suffered “a very mild recession.” Because the US central bank (Fed) is trying to curb economic activity to relieve pressure on prices. But the longer inflation persists, the harder it must hit, at the risk of triggering a recession.
Fed officials even believe that a period of lower growth and a slowdown in the labor market would be necessary to overcome this inflation, which they consider “unacceptable”, according to the report of a meeting organized on September 20 and 21, published on Wednesday. They noted that inflation “has not yet responded” to the rate hikes intended to curb it, and thus has embarked on another sharp hike in its main policy rate, by three-quarters of a percentage point.
Several of these Fed officials stressed that “acting too timidly would be more costly than acting too harshly” on rates, and monetary policy tightening must continue, “despite a slowing labor market.” The rise in wholesale prices in September, which measures producer-side inflation, released on Wednesday, could have set the trend, with a larger-than-expected increase in one month and a slight slowdown in one year.
Source: BFM TV
