US inflation heats up in September; consumer spending rises
TLT•The PCE price index rose 0.5% in September, up 3.6% year over year, while consumer spending increased 0.5%. Inflation-adjusted spending was unchanged.
1. Inflation picks up
The Personal Consumption Expenditures Price Index rose 0.5% in September after a 0.3% increase in August, and was up 3.6% from a year earlier. Core PCE inflation increased 0.3% for the month and 3.1% year over year.
2. Spending and rates
Consumer spending increased 0.5% in September after rising 0.9% in August, but was unchanged after adjusting for inflation. Spending grew at a 3.8% annualized rate in the third quarter, when the economy expanded at a 3.4% rate. Markets were pricing in an 84.6% chance of a Federal Reserve rate hike in December; the Fed had kept its benchmark rate at 3.75%-4.00%.
