Economy - 2 min read
PCE Inflation Hits 3.6% in September: What It Means for the Fed
The Fed's preferred inflation gauge rose 0.5% in September and 3.6% over the year. Core PCE rose 3.1%. What PCE is and why it moves markets.
FinStackX Editorial Team ·
The Federal Reserve's favorite inflation measure showed prices still rising faster than the central bank wants. KuCoin News reported that the Personal Consumption Expenditures (PCE) price index rose 0.5% from August to September and 3.6% from a year earlier.
The numbers
- Headline PCE: +0.5% month over month, +3.6% year over year.
- Core PCE (excluding food and energy): +0.3% month over month and +3.1% year over year, Quartz reported.
- Fed target: 2%.
Both readings are well above the target, which is why Fed officials are discussing rate hikes.
What is PCE?
PCE measures how much prices change for goods and services that households buy. The Fed prefers it to the better-known consumer price index (CPI) because it covers a wider range of spending and adjusts when people switch to cheaper items. "Core" strips out food and energy because they swing a lot from month to month.
What is driving prices?
Reuters, via MarketScreener, said consumers paid more for gasoline and other goods, and that third-quarter economic growth was stronger than expected. Oil near $113 a barrel adds to fuel costs. See our oil report.
Why markets care
Higher inflation makes rate hikes more likely, which pushed gold to a yearly low and weighed on stocks. Our Fed explainer covers the odds for December.
What it means for you
- Everyday costs such as fuel and groceries are still rising faster than the Fed's goal.
- Borrowing costs could rise if the Fed responds.
- Savings rates may stay attractive, but inflation can erode what they earn in real terms.
What to watch next
The October jobs report on November 6 and the next inflation readings will decide how likely a December hike becomes.
Figures come from news reports, not directly from the government release. Check the Bureau of Economic Analysis for the official data.
Sources
- KuCoin News: Gold hits yearly low
- Quartz: Gold four-month low, inflation and Fed hike
- Reuters via MarketScreener
This article is for informational purposes only and is not financial advice. Markets move quickly; check live prices before making decisions.
