Prices Rise but Pressure Remains Controllable

　　By category, service prices rose 0.3%, primarily reflected in areas such as airfare, hotel accommodation, financial services and insurance, housing, and utilities, driving the increase in PCE inflation. Goods prices edged up 0.1% month-on-month: a 1.7% decrease in prices for recreational goods and vehicles was offset by slight increases in prices for other durable manufactured goods and gasoline.

　　The Federal Reserve uses the PCE price index as a key gauge for its 2% inflation target. Last week, the Federal Open Market Committee (FOMC) resumed easing policies, cutting the federal funds rate target range by 25 basis points to 4.00%-4.25%. Fed Chair Jerome Powell, speaking at an event this week, stated, "In the near term, the risks to inflation are tilted to the upside, and the risks to employment are tilted to the downside — a challenging situation."

　　Consumer spending, which accounts for over two-thirds of economic activity, increased 0.6% month-on-month in August, marking the third consecutive month of growth and surpassing July's 0.5% rise, demonstrating economic resilience.

　　High tariffs, persistent inflation, and increased difficulty in finding employment have not yet pushed US consumers into a slump. In August, Americans increased their spending again, helping the US economy maintain steady operation. The growth in spending was primarily driven by increased expenditure in service sectors such as transportation (including air travel). Consumers dined out more frequently, demand for hotel accommodation rose, and spending on entertainment services also increased.

　　Income growth was a key driving force behind this, with personal income rising 0.4% month-on-month in August. Workers' wage growth outpaced inflation, leading to an improvement in the purchasing power of wages.

　　Robust consumer spending pushed the US second-quarter Gross Domestic Product (GDP) annualized growth rate to 3.8%, the fastest pace in nearly two years. Current expectations for third-quarter GDP growth are generally clustered around 2.5%, above the long-term sustainable growth rate of 1.8%.