PCE Inflation Remains Unchanged for October, Annual Increase at 3%

In October, the PCE (Personal Consumption Expenditures) price index, a key inflation gauge that the Federal Reserve monitors closely, exhibited no significant change from the previous month, with an increase of less than 0.1%. Over the past year, the index has risen by 3.0%, signaling a measure of inflation that is closely watched by policymakers.

Monthly and Annual Inflation Rates

The PCE price index measures the prices that people living in the United States pay for goods and services, and is used to gauge inflation by looking at how these prices change over time. For October, the index showed little monthly movement but reflected a 3% increase from the same month in the previous year. When food and energy are excluded—two categories that can be volatile—the core PCE inflation was up 0.2% month-over-month, and had a 3.5% increase on an annual basis.

Consumer Spending and Income

Despite flat inflation, the report indicated a modest increase in U.S. consumer spending, which grew by .02% during October. This includes a notable $53.1 billion more spent on services, while spending on goods dropped by $11.9 billion, impacted by declines in purchases like motor vehicles and parts as well as energy goods. Furthermore, personal income rose by 0.2% in October, and disposable income saw a growth of 0.3%. Personal savings reached $768.6 billion, with the saving rate at 3.8%.

Breakdown of Expenditure

The shift in consumer expenditure between goods and services was pronounced. Americans spent less on goods, particularly on new motor vehicles and energy-related products. However, spending on services increased, driven by healthcare, housing, utilities, and international travel. Food prices went up slightly by 0.2%, while energy prices dropped significantly by 2.6%.

The overall economic picture is mixed, with the PCE inflation index revealing stable prices for the month but an ongoing increase year over year. This information comes alongside broader economic indicators that suggest growth, such as a higher GDP in the last quarter.

PCE, inflation, spending