Price Hikes and Consumer Spending Cooled Last Month

The core Personal Consumption Expenditures price index, which excludes volatile gas and food prices and is the Fed’s preferred inflation gauge, rose 0.2% last month and 3.5% for the year ended in October, according to data released Thursday.  The core PCE price index is at its lowest annual rate since April 2021.

When including gas and food prices, the overall PCE index was unchanged last month. It’s the first time since April 2020 that prices did not rise on a monthly basis.

Annually, the headline index is up 3%, which is the lowest it’s been since March 2021.

The Commerce Department’s latest Personal Income and Outlays report also showed that consumers reined in some spending in October. Consumer expenditures increased 0.2% last month, a marked pullback from the 0.7% jump seen in September.

Spending on international travel, hospital and nursing home services, accommodations and gasoline helped to drive the month’s increase.

Personal income increased by a modest 0.2% last month, and the savings rate ticked up by 0.1 percentage points to 3.8%, according to the report.