A man climbs into the refrigerator to get milk at a Walmart store in Rosemead, California on November 22, 2022.
Frederic J. Brown | AFP | Getty Images
Inflation rose in October roughly in line with estimates, sending a sign that price increases are at least stabilizing, the Commerce Department reported Thursday.
The Core Personal Consumption Expenditure Price Index, a gauge that excludes food and energy and is favored by the Federal Reserve, rose 0.2% for the month and 5% from last month. a year ago. The monthly increase was below the Dow Jones estimate of 0.3%, while the yearly gain was in line.
The gains also represent a deceleration from September, which saw a monthly increase of 0.5% and an annual gain of 5.2%.
Including food and energy, the overall PCE increased by 0.3% on the month and 6% on an annual basis. The monthly increase was the same as September, while the annual gain was down from the 6.3% pace.
The ministry also reported that personal income jumped 0.7% for the month, well ahead of the 0.4% estimate, and spending rose 0.8%, as expected.
While the Fed considers a wide range of measures to measure inflation, it prefers the PCE index because it takes into account changes in consumer behavior such as the substitution of cheaper goods for more expensive items. This is different from the consumer price index, which is a crude measure of price changes.
Policymakers view core inflation as a more reliable measure because food and energy prices tend to fluctuate more than other items.
In other economic news Thursday, the Labor Department reported weekly jobless claims stood at 225,000, down 16,000 from the previous week and below the estimate of 235,000.
Another jobs report from outplacement firm Challenger, Gray & Christmas said planned layoffs rose 127% on a month-to-month basis in November and 417% from a year ago. Even with that massive increase, the company noted that the year-to-date layoff total is the second-lowest on record in a dataset dating back to 1993.
The data comes at a pivotal time for the Fed, which is in the midst of a campaign to raise interest rates in an effort to bring down inflation.
In a speech on Wednesday, Chairman Jerome Powell said he saw signs that price increases were easing, but added he needed more consistent evidence before the central bank could change policy. He did, however, indicate that he believed rate hikes could start to taper off, possibly as early as December.
“The truth is that the way forward for inflation remains very uncertain,” Powell said.
PCE data showed that the numbers remain volatile. Goods inflation rose 0.3% for the month after declining in the previous three months, while services inflation rose 0.4%, down from two consecutive increases of 0. .6%. Economists are looking for a return to a more service-based economy after outsized demand for goods played a major role in soaring inflation in 2021.
Food inflation rose 0.4% while prices for energy goods and services rose 2.5%.
The Fed is watching the labor market closely for more signs of slowing inflation.
Unemployment insurance claims had risen slightly and the level of continuing claims rose by 57,000 to 1.61 million, the highest level since February.
