PCE price index rises 0.2% in September; inflation rate drops to 2.1%

In September 2024, the personal consumption expenditure (PCE) price index in the US saw a month-over-month increase of 0.2%, following a 0.1% rise in August, which aligns with market expectations.

PCE price index rises 0.2% in September; inflation rate drops to 2.1%

This uptick was primarily driven by a 0.3% increase in service prices, indicating robust demand in sectors such as healthcare and leisure. Conversely, prices for goods experienced a slight dip of 0.1%, reflecting fluctuating demand in specific retail categories. The core PCE index, which excludes food and energy prices, registered a 0.3% increase—the highest gain in five months—following an upwardly revised 0.2% rise in August, and it also met forecasts. Notably, food prices rose by 0.4%, reflecting ongoing supply chain pressures, while energy prices fell sharply by 2%, influenced by declines in crude oil prices and reduced transportation costs. On an annual basis, the PCE inflation rate dropped to 2.1%, marking a new low not seen since February 2021. This decline was down from an upwardly revised rate of 2.3% in the previous month. This decline suggests that inflationary pressures may be easing, which could give the Federal Reserve some leeway in its monetary policy decisions.

Core inflation steady at 2.7%, influencing Fed's rate decisions

Meanwhile, the core inflation rate remained steady at 2.7%, slightly above expectations that it would decrease to 2.6%. This stability indicates persistent inflationary pressures in core goods and services, which may influence the Fed's approach to interest rate adjustments in the coming months. Overall, the data reflect a mixed picture of consumer price trends, highlighting resilience in certain areas while showcasing the economic landscape's ongoing complexities.