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Fed's Preferred Inflation Index Rises to 2.3% in October
The U.S. Commerce Department reported that the Federal Reserve's preferred inflation index rose 2.3% in October, in line with expectations.
The personal consumption expenditures price index rose 0.2% on a monthly basis and 2.3% on a yearly basis, according to the data. Both were in line with Dow Jones' expectations, although the annual rate was higher than September's 2.1%.
Excluding food and energy, core inflation showed stronger readings, with an increase of 0.3% on a monthly basis and a 2.8% annual rate, also in line with expectations. The annual rate was 0.1% higher than in September.
Services prices contributed most of the inflation in October, rising 0.4% while goods fell 0.1%. Food prices were little changed while energy prices fell 0.1%, according to CNBC.
Federal Reserve policymakers are targeting an annual inflation rate of 2%; personal consumption expenditures (PCE) inflation has been above that level since March 2021 and peaked at around 7.2% in June 2022, prompting the Fed to launch a rate hike.
While inflation has fallen significantly since the Fed began tightening monetary policy, it remains a vexing problem for households and played a significant role in deciding the U.S. presidential election. Despite slowing over the past two years, the cumulative effects of inflation have hit consumers hard, especially lower-income earners.
Consumer spending remained strong in October, albeit slightly down from September. The report showed spending rose 0.4% on a monthly basis, as expected, while personal income jumped 0.6%, beating estimates of 0.3%.
