Key facts
- The PCE price index rose 0.5% in September after an unrevised 0.3% rise in August, the BEA said.
- Core PCE inflation was 3.1% year-on-year in September after an unrevised 3.0% rise in August.
- The Fed held its benchmark rate in the 3.75-4% range the day before the data.
- CME's FedWatch Tool showed markets pricing a roughly 84.6% chance of a December rate hike.
US inflation accelerated in September, with the Personal Consumption Expenditures price index rising 0.5 percent after an unrevised 0.3 percent increase in August, the Commerce Department's Bureau of Economic Analysis said, according to The Globe and Mail. The increase was in line with economists' expectations.
In the 12 months through September, PCE inflation advanced 3.6 percent after an unrevised 3.4 percent rise in August. Core PCE, which excludes food and energy, rose 0.3 percent over the month after an upwardly revised 0.3 percent gain in August, and was up 3.1 percent year-on-year after an unrevised 3.0 percent rise.
The data were included in the government's advance gross domestic product report for the third quarter, which showed the economy growing at a 3.4 percent annualized rate. The Fed, which tracks the PCE measures for its 2 percent inflation target, left its benchmark interest rate in the 3.75-4 percent range the day before the release while acknowledging that inflation "remains elevated."
Fed Chairman Kevin Warsh told reporters that "energy and related prices have moved higher again in recent weeks, and our job is to ensure that relative price changes in some sectors do not broaden out across the economy, and that inflation expectations remain as they are anchored." Financial markets were pricing in a roughly 84.6 percent chance of a rate hike in December, CME's FedWatch Tool showed.
Consumer spending rose 0.5 percent in September after an unrevised 0.9 percent increase in August. Adjusted for inflation, spending was unchanged, and it increased at a 3.8 percent rate in the July-September quarter.