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US inflation heating up – Bloomberg

Consumer prices projected to be higher next year

The forecast for the personal consumption expenditures (PCE) price index, used by the Federal Reserve as a major inflation metric, has been raised for each quarter of the upcoming year, Bloomberg reported on Tuesday.

According to the figures based on the median forecast of 65 economists in a Bloomberg survey carried out during the week through November 11, sluggish economic activity and hiked interest rates will send the PCE price index averaging at 2.8% by the final three months of 2023.

Forecasters also upgraded quarterly expectations for the core PCE price measure that exclude food and energy costs, and the consumer price index.

They still expect price pressures to cool sharply over the course of the year. Meanwhile, the chances of a recession during 2023 continued to increase, rising to 65% from 60% last month.

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A man looks over the meat selection at a Tops Super Market October 27, 2022 in Greenville, New York.
US consumer prices continue to soar

The analysts now expect the Fed to begin cutting rates in the final three months of next year.

Nearly half of polled economists talked to the agency prior to November 10, when the consumer price index was released, showing that US inflation rose at a slower-than-expected pace in October. Bolstered by a robust labor market and higher wages, consumer spending has largely held up in the face of the quickest price growth in a generation.

At the same time, most economists expect high inflation and the regulator’s tough policy response to tip the economy into recession next year. The central bank is expected to raise the key interest rate by 50 basis points at the December meeting.

The dismal projections for the US economy in the first six months of 2023 were also trimmed. GDP is forecast to flatline in both quarters amid softer consumer spending before resuming tepid growth in the back end of the year.

For more stories on economy & finance visit RT’s business section

https://ift.tt/GjbVWHo 16, 2022 at 01:31PM
from RT – Daily news

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