Nov 30, 2023 - Economy

Fed’s go-to inflation gauge shows slowing price hikes

Courtenay Brown

Photo: Bing Guan/Bloomberg via Getty Images

The Federal Reserve’s preferred measure shows inflation was 3% in October compared to the same month a year ago, the Commerce Department said on Thursday.

Why it matters: The data is the latest to confirm that price gains across the economy are continuing to slow, allowing some relief for the American consumer.

By the numbers: The October figure compares to the 3.4% in the prior month.

Excluding volatile food and energy prices, the personal consumption expenditures price index was 3.5%, versus the 3.7% in September.

Between the lines: The data shows that cooler inflation came alongside more muted consumer spending, which rose 0.2% last month — a slower pace than the 0.7% in September.

Still, spending isn’t falling off a cliff. The Personal Consumption Expenditures price index was flat for the month of October, which means consumer spending was still positive in real terms (+0.2%).
That is being supported by real wage gains: adjusted for inflation, disposable income rose by 0.3% last month (it was flat in September).

Of note: The personal saving rate ticked up just slightly to 3.8%, 0.1 percentage point higher than September.

The bottom line: Inflation has plunged from its peak last year — and by the Fed’s preferred measure is edging closer to the central bank’s 2% target.

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Fed’s go-to inflation gauge shows slowing price hikes

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