Fed's Preferred Inflation Indicator Surpasses Expectations in September

The Federal Reserve's preferred inflation indicator, Core PCE, recorded a higher-than-anticipated increase in September, matching August's 2.7% rise. The expected increase was 2.6%.

Headline PCE and YoY PCE

The headline PCE saw a 0.2% month-over-month (MoM) increase, which led to a year-over-year (YoY) PCE of 2.1%, marking its lowest point since February 2021.

PCE on a MoM Basis

When viewed on a MoM basis, the PCE seems to be on an upward trend, with costs for Durable Goods and Services on the rise.

SuperCore PCE

The SuperCore PCE, which excludes shelter services, increased by 0.3% MoM. This left the YoY change relatively stable at about 3.2%.

Personal Incomes and Spending

Personal incomes saw a 0.3% MoM increase, as predicted. However, spending increased more than expected, with a 0.5% rise compared to the anticipated 0.4%.

YoY Basis for Bond Spending and Income Growth

On a YoY basis, both bond spending and income growth are showing signs of slowing down.

This data does not necessarily provide the Federal Reserve with an unequivocal mandate to cut rates.

Bottom Line

The data presented here provides an in-depth look at the current state of inflation, personal incomes, and spending. The higher-than-expected increase in the Fed's preferred inflation indicator, Core PCE, raises questions about future economic trends and the Federal Reserve's potential responses. What are your thoughts on these developments? Do you think the Federal Reserve should cut rates in response to this data? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.