U.S. Fed's closely watched inflation measure rises 3 pct in October

  • World
  • Friday, 01 Dec 2023

WASHINGTON, Nov. 30 (Xinhua) -- The U.S. personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, rose 3.0 percent in October, as inflation cools amid high interest rates, the Commerce Department reported on Thursday.

The latest figure came after the measure in June slowed to 3.2 percent year on year from 4 percent in May, before accelerating to 3.4 percent in July, August and September, which indicated continued inflation pressures.

The PCE price index was unchanged in October from the previous month, after a 0.4-percent increase in September, according to estimates released by the Commerce Department's Bureau of Economic Analysis.

The PCE gauge takes into account how consumers change their behavior in light of higher prices and is a broader measure of consumer behavior than the Consumer Price Index (CPI).

The so-called core PCE price index, which strips out volatile food and energy prices, rose 3.5 percent in October from a year ago, down from 3.7 percent in September and 3.8 percent in August, but still well above the Fed's inflation target of 2 percent.

Twelve-month core PCE inflation peaked at 5.6 percent in February 2022.

Price increases largely moderated across Districts, though prices remained elevated, according to the latest Fed Beige Book, a survey on economic conditions based on information collected from its 12 regional reserve banks, released Wednesday.

Most Districts expect moderate price increases to continue into next year, the Beige Book noted.

Richmond Federal Reserve President Thomas Barkin told CNBC Wednesday that policymakers need to retain the option of raising interest rates if inflation doesn't show sufficient progress down the road.

"If inflation comes down naturally and smoothly, awesome, you know, there's no particular need to do anything with interest rates if inflation steps down," Barkin said.

"But if inflation is going to flare back up, I think you want to have the option of doing more on rates," he said.

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