US Core PCE Price Index Update
The Commerce Department announced on Friday that personal income and spending increased by 0.4% month over month in September, above expectations of growth of 0.3% and the preceding month’s increase of 0.4% (revised downward to +0.3%).
Expenditures by individuals increased by 0.6% month over month, above the 0.4% gain forecast and the 0.6% increase seen in the previous period (updated from 0.4%).
The US core PCE price index rose 0.3% month over month, in line with expectations and somewhat higher than the 0.3% growth seen in the previous two months.
Compared to the projected +6.3% and the actual +6.2%, the actual result is +6.2% Y/Y.
The US core PCE price index increased by 0.5% month-over-month, matching expectations and slightly outpacing the preceding month’s increase (revised downward from +0.6% to +0.5%).
+1.5% compared to +5.2% forecasted and +4.9% historically.
Inflation has moved from goods to services, according to the pricing statistics. Nondurable items, mostly gasoline and other energy, drove the 0.1% drop in goods prices last month. But although energy costs decreased by 2.4%, the cost of food increased by 0.6%.
Housing and transportation services drove the overall 0.6% rise in service prices.
Ex-Treasury Secretary Lawrence Summers predicts the causes fueling inflation will not abate anytime soon. In a tweet, he explained that the growing value of the dollar had a “negative influence” on the PCE number for the day.
The DXY index of the dollar’s value against a basket of other currencies has increased by about 19% over the last year.
Officials at the Federal Reserve have said they will need to see evidence of falling inflation for many months before they begin to ease their policy tightening toward the Fed’s 2% objective. Traders anticipate a 75-basis point boost from the central bank next week and a gradual decrease to a 50-basis point hike in December. With the CME FedWatch tool, the odds of a 50-bp raise in December are 51.5%, and the odds of another 75-bp boost are 41.5%.
The Employment Cost Index, another piece of information the Fed considers when deciding policy, increased 1.2% Q/Q in Q3, which was in line with expectations.
On Thursday, GDP growth for Q3 came in at 2.6%, above forecasts, although US core PCE price index growth slowed to 4.5%.
Featured Image- Megapixl @ Maxxyustas