Despite the Federal Reserve raising interest rates five times this past year, inflation continues to be much higher than the central bank’s 2 percent target.
The Personal Consumption Expenditures inflation measure, which was released Friday, showed the index rose last month by 6.2 percent from a year ago, which was slightly down from 6.4 percent in July.
Prices for goods increased 8.6 percent and prices for services increased 5.0 percent. Food prices increased 12.4 percent and energy prices increased 24.7 percent. Excluding food and energy, the PCE price index increased 4.9 percent from one year ago, the statement read.
“Inflation is very high in the United States and abroad, and the risk of additional inflationary shocks cannot be ruled out,” Lael Brainard, the Fed’s vice chair, said in a speech Friday. She said monetary policy will need to be “restrictive for some time.”
“We are committed to avoiding pulling back prematurely,” she said.
We reported yesterday that the average 30-year mortgage rate in the U.S. hit 6.7 percent last week, which was seen as a significant increase from the 6.29 percent a week earlier.
Jenica Pivnik, a mortgage loan originator in Calabasas, Calif., told the Trends Journal the she believes there will be a clearer picture on mortgages after the midterms and after the October CPI data is released. She said she was surprised by how quickly the rate jumped.
“We’ve seen weeks of actions condensed in a matter of days,” she said.