In brief
The BEA’s September PCE data shows inflation moving higher, with energy costs surging as Middle East tensions keep fuel prices elevated. Core inflation runs at 3.1% YoY, and consumer spending remains solid despite rising prices. The Fed responded by leaving rates unchanged at 3.75‑4% while indicating inflation remains above its 2% target.
The U.S. Bureau of Economic Analysis (BEA) released data on Thursday showing that consumer inflation accelerated in September, rising 0.5 % month‑on‑month on the personal consumption expenditures (PCE) index the Fed uses as its preferred gauge.
According to Xinhua, the increase was driven largely by a 9.2 % jump in gasoline and other energy goods, influenced by Middle‑East tensions and restrictions on shipping through the Strait of Hormuz.
Overall PCE inflation rose 3.6 % year‑on‑year, the highest since May and above the Fed’s 2 % target. For the core PCE price index, which strips out food and energy, the month‑on‑month rise was 0.3 % and the year‑on‑year gain 3.1 %, a rise from the 3 % seen in August.
Consumer spending also increased 0.5 % in September, though inflation offset the gain, leaving real spending essentially unchanged; personal income grew just 0.2 %.
The personal saving rate fell to 3.8 %, the lowest level in nearly four years, according to the BEA report.
Meanwhile, the Federal Reserve left its benchmark interest rate unchanged at a 3.75‑4 % range on Thursday, noting that inflation remains elevated.
Financial markets were pricing an 80 % chance of a rate hike at the Fed’s December meeting, according to the CME FedWatch tool, after the Fed’s quarter‑point increase nine months earlier.
Reuters also covered the data, reporting the same 3.6 % year‑on‑year PCE figure and noting the impact of higher gasoline and goods prices on the overall inflation picture.
