Price pressures rose again in September as higher energy costs spread across the economy, according to the Federal Reserve's preferred inflation gauge.
Core personal consumption expenditures, which strips out volatile food and energy prices, rose by 0.3% in September from the prior month and by 3.1% from a year earlier, in line with expectations. Headline PCE increased by 0.5% on the month and by 3.6% year over year because of heightened oil prices, also in line with expectations.
This report marks the 68th consecutive month of PCE above the Fed's 2% target, cementing a picture of inflation that has remained elevated for nearly six years.
The reading comes just one day after Fed officials voted to hold interest rates at 3.75%-4%, punting any increases to its December meeting. Chairman Kevin Warsh said the next six weeks would be "information rich." September's PCE reading will be a key component of that information.
"At some point -- especially if we have hot inflation readings in November like October -- investors are increasingly likely to begin questioning the commitment to price stability at 2% which could lead to a need to hike by .5% in December," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, on Wednesday.
For now, the Fed is calling for patience.
This is breaking news. Read a preview of the PCE report below and check back for more analysis soon.
The Federal Reserve's preferred inflation gauge is expected to show price pressures rose again in September as higher energy prices made their way across the economy.
Economists expect core personal consumption expenditures, which strips out volatile food and energy prices, to rise 0.3% in September from the prior month and 3.1% from a year earlier, according to FactSet estimates. Headline PCE is forecast to increase 0.5% on the month and 3.61% year over year, because of heightened oil prices.
If confirmed, the report would mark the 68th consecutive month of PCE above the Federal Reserve's 2% target, cementing a picture of inflation that has remained elevated for nearly six years.
The reading comes just one day after the Federal Reserve voted to hold interest rates at 3.75%-4%, punting any increases to its December meeting. Chairman Kevin Warsh said the next six weeks would be "information rich." September's PCE reading will be a key component of that information.
"At some point -- especially if we have hot inflation readings in November like October -- investors are increasingly likely to begin questioning the commitment to price stability at 2% which could lead to a need to hike by .5% in December," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, in a note on Wednesday.
For now, the Fed is calling for patience. The PCE report is due at 8:30 a.m. Eastern on Thursday.
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