The U.S. Commerce Department said on Friday that its delayed Personal Consumption Expenditures price index accelerated slightly to 2.8% in the twelve months to September, up from 2.7% in August and meeting economists’ projections.
Month-on-month, the reading rose 0.3%, equaling the previous month’s rate and in line with estimates.
Stripping out volatile items like food and energy, the so-called "core" reading stood at 0.2% month-on-month, matching expectations and the August pace. Annualized, the underlying measure eased slightly to 2.8% from 2.9%, and was marginally slower than anticipated.
The Federal Reserve often closely tracks parts of the PCE price index as a gauge of inflationary pressures in the world’s largest economy. Notably, this latest release was postponed, along with a host of other data points watched by the Fed, due to a record-long federal government shutdown.
Markets widely expect the central bank to slash interest rates at the end of its next policy gathering on December 9-10, as part of a bid to support a waning labor market. Signs that inflation is stable, albeit floating above the Fed’s 2% target, may further bolster these bets.
According to CME FedWatch, the odds of a quarter-point drawdown in borrowing costs at the meeting now stands at roughly 87%.
Separately, a survey from the University of Michigan -- which, as a non-governmental data source, has not been postponed by the federal shutdown -- showed that consumer sentiment brightened somewhat in early December, although the report flagged that the uptick was "within the margin of error."
Year-ahead inflation expectations, meanwhile, decreased to 4.1% from 4.5% in November. It was the lowest mark since January and the fourth consecutive month of declines. But short-run inflation estimates remain above the 3.3% seen in January, Hsu said.
"Consumers see modest improvements from November on a few dimensions, but the overall tenor of views is broadly somber, as consumers continue to cite the burden of high prices," Hsu added.
Source: Investing