US Fed's favored inflation index slows to 2.1% in September

The Federal Reserve’s closely watched inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, rose in September as expected, backing a slower pace of rate cuts than the 50 basis points the central bank took in September.

The index showed prices rose 2.1% year-on-year (YoY) in September, in line with estimtaes, after soaring 2.3% in August, according to the US Commerce Department data released Thursday.

On a monthly basis, the index rose 0.2% in September, in line with Wall Street’s expectations.

The Core PCE price index, which strips out volatile food and energy items, rose 0.3% in September month-on-month (MoM) and was up 2.7% from a year earlier.

The index is slightly above the Fed’s 2% inflation target and comes about a week before the Nov. 5 presidential elections.

The data also indicated that wages and salaries went up 0.5% before adjustment as per inflation, supporting spending. Further, the growth in total disposable income increased by 0.3% in September.