Key inflation gauge watched by the Federal Reserve hits another 30-year high

According to the Commerce Department, inflation reached a new 30-year high in august as ongoing price pressures were fueled by supply chain disruptions.

While the core personal consumption expenses price index did not include food or energy, it increased 0.3% and was 3.6% more than one year ago. It was slightly lower than the Dow Jones 0.2% estimate and the 3.5% annual forecast.

This is the most since May 1991, reflecting inflationary pressures which Fed Chairman Jerome Powell stated earlier this week that he found “frustrating”

PCE prices increased 0.4% in the month, and 4.3% over the year. This is the highest increase since January 1991. This was due to a 24.99% rise in energy prices, and 2.8% increase in food.

Prices for goods increased 5.5% and services 3.6%.

Inflation rose 0.2% in the month as individuals’ incomes increased by 0.2%. This is in line with forecasts but indicates that real incomes are falling in tandem with inflation. The 0.8% increase in spending was slightly higher than the forecast 0.7%.

Individual savings reached $1.71 trillion at 9.4%. This is down from 10.1% in August. As the government was rushing to make payments to people and business to stop the spread of Covid, the savings rate reached its peak at 33.8% on April 2020.

Separate data Friday morning revealed that manufacturing continued its expansion.

For September, the ISM Manufacturing Index registered 61.1. This is the reading that indicates how many companies are experiencing expansion. Anything over 50 is growth. Dow Jones estimates were 59.5.

It also revealed that prices were rising with 81.2% reporting an increase in their report, compared to 79.4% reported August.

Although order backlogs declined to 64.8 from one month ago, it was still a decline of 3.4 percentage points. Companies reported delays overall.

Supply chain issues are expanding beyond electronic chips and into other commodities. One respondent from the industry of electrical equipment, appliances, and components stated that lead times are increasing, shipping lanes slowing down, and they will continue to do so until 2021.

The University of Michigan index showed that consumer sentiment increased, with 72.8 rising to September from 70.8 in August. This was compared to 70.8 for August. A 71 estimate also indicated that consumers were more optimistic.