The personal consumption expenditures price index, which is the Federal Reserve’s preferred gauge for measuring inflation, came in broadly in line with expectations last month, bolstering expectations for unchanged interest rates next week.
The PCE price index climbed by 3.4% year-on-year in September, flat from the downwardly revised 3.4% figure observed in August and matching the anticipated 3.4% increase, the Bureau of Economic Analysis said Friday.
On a monthly basis, the headline PCE price index rose by 0.4% compared to the previous month, matching the August figure but surpassing the projected 0.3% rise.
When excluding energy and food prices, which provides a more reliable underlying measure of inflation known as the core PCE price index, there was a 3.7% year-on-year increase, down from August’s 3.9% rate and in line with the the estimated 3.7%.
On a monthly basis, the core PCE price index increased by 0.3%, showing an acceleration from the 0.1% seen in August and in line with expectations.
| PCE Price Index | Sept. (y/y) | Aug. (y/y) | Sept. (m/m) | Aug. (m/m) |
|---|---|---|---|---|
| Headline | 3.4% | 3.4% | 0.4% | 0.4% |
| Core (Excluding Energy and Food) | 3.7% | 3.9% | 0.3% | 0.1% |
Before the release of the PCE price index, traders had already fully factored in the likelihood that the Federal Reserve would maintain interest rates at the upcoming Federal Open Market Committee meeting scheduled for Wednesday.
Additionally, there is nearly a 75% probability the Fed will take the same action in December, according to CME Group’s FedWatch tool.
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