WASHINGTON — The Federal Reserve’s favored inflation gauge just moved in the wrong direction. It comes as President-elect Donald Trump promises massive tariffs that could push the cost of living even higher.
The Personal Consumption Expenditures price index rose 2.3% in October from the year before, accelerating from the 2.1% pace notched in September, according to Commerce Department data released Wednesday.
On a monthly basis, prices rose 0.2%, matching the gain seen in September. Inflation within the services sector drove much of the monthly increase, as those prices rose 0.4% from September, while goods prices ticked up by 0.1%.
Wednesday’s inflation readings were exactly what economists had anticipated: Consensus estimates called for a 0.2% monthly increase and for the annual rate to climb to 2.3%, according to FactSet.
Economists were anticipating that inflation would run hotter in October, in part because of stubborn housing-related costs and some price hikes considered one-time in nature, as well as unfavorable comparisons to a year-ago period when inflation cooled rapidly.
The process of reining in high inflation was expected to be bumpy, and the latest reading may be just that. However, some persistent price pressures (for significant expenses like rents and mortgages) are keeping inflation from stabilizing at the central bank’s target 2% rate.
When excluding food and gas prices, two categories that tend to be very volatile, the core PCE index rose 0.3% on a monthly basis and accelerated to 2.8% for the 12 months ended in October. The core index — which posted monthly and annual readings of 0.3% and 2.7% in September — is closely watched as a gauge of underlying inflation.
“We’re going to see ebbs and flows in the inflation data,” Gus Faucher, chief economist of the PNC Financial Services Group, told CNN Business this week. “The general trend is toward slower inflation.”
The widow of a Pinellas Park firefighter turned to Susan Solves It after she was cut off from the savings her husband left behind for her.
