Consumer prices continued their steady climb in October, with the Personal Consumption Expenditures (PCE) Price Index—the Federal Reserve’s preferred inflation gauge—rising 0.2%.
- This marks the third time in four months inflation has grown at that pace.
- On an annual basis, headline inflation rose to 2.3%, up from 2.1% in September, marking only the second increase in yearly growth this year.
Core prices, which exclude volatile food and energy categories, increased by 0.3% for the second consecutive month and the fourth time in 2023. This pushed the annual core inflation rate to 2.8%, up from 2.7% in September and the highest level since April.
- Economists had accurately projected these numbers, signaling confidence in inflation’s current trajectory.
Personal income, however, outpaced expectations, jumping 0.6% in October—double the growth seen in September and the largest increase since March.
- Spending rose 0.4%, a slight slowdown from September’s 0.6% but consistent with this year’s average.
What They’re Saying: Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, commented, “PCE inflation is 2.3% so far, but probably headed toward 2.5% on the year. That’s still above target, though not ridiculously so.”
Bottom Line: Incomes are rising at an accelerated pace, but spending, luckily, hasn’t kept up. Meanwhile, inflation is likely to close the year above the Fed’s 2% target, keeping pressure on policymakers to balance price stability and economic growth.
