An indicator from the US Department of Commerce showed that the inflation rate rose strongly in October, accelerating at the fastest rate since the early 1990s, and Fed policymakers paid close attention to this indicator.
The price of personal consumption expenditure excluding food and energy rose 4.1% from a year ago, and the so-called core reading continued to rise in January 1991. The Fed prefers this indicator because it excludes the volatility that these two categories may show.
This reading is in line with Dow Jones’ estimate.
The PCE index, which includes food and energy, rose 5%, the fastest increase since November 1990.
As prices soared, consumer spending also increased, increasing by 1.3% that month, higher than the 1% estimate. What followed was a 0.5% increase in personal income, which was much higher than the expected 0.2%.
Inflation continues to be mainly reflected in soaring energy costs, which have risen by 30.2% from a year ago, while food prices have risen by 4.8% during this period. Service industry inflation rose by 6.3%, the same as in September, while commodity inflation rose by 7.3%, which was higher than the previous month’s 6.4%.
Total personal savings this month was US$1.32 trillion, accounting for 7.3% of disposable personal income, down from 8.2% in September, when total savings was US$1.48 trillion.
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