Inflation sent household income tumbling for the third straight month in September, data from the Bureau of Economic Analysis showed Friday.
Disposable personal income, which measures income after taxes, rose three-tenths of a percentage point in September compared with a month earlier, the BEA’s monthly report on personal consumption expenditures showed. Inflation, as measured by the personal consumption price index, was up by 0.4 percent.
The result was a 0.1 percent decline in disposable personal income. That followed the same decline in August and a 0.2 percent decline in July.
Salaries and wages rose by 0.4 percent for the month, putting them flat with inflation.
Personal interest income increased in September by a very strong one percent, likely reflecting higher interest rates. The increase in interest income may be helping fuel the higher-than-expected consumer spending that is likely sustaining inflation at uncomfortably high levels. The Federal Reserve has been raising interest rates to combat inflation but the rise in interest income may be partially offsetting downward pressure on demand from higher borrowing costs.
