US Core PCE Inflation Rises to 2.5%, Exceeding September Forecast

US core personal consumption expenditures (PCE) inflation rose 2.5% year over year in September, above forecasts and keeping pressure on the Federal Reserve’s policy outlook for the central bank.

The September figure was 0.1 percentage point above the 2.4% forecast and 0.8 point below the prior 3.3% reading. Year over year compares prices with the same month a year earlier, so the 2.5% figure describes the annual pace rather than a monthly change.

Core PCE remained half a percentage point above the Fed’s 2% target. The index is the central bank’s preferred gauge of underlying inflation, making it an important input to its policy outlook.

Persistent inflation may prompt the Fed to take a cautious approach, with implications for financial markets and cryptocurrency valuations. The September reading exceeded expectations even as it declined from the previous reading, leaving inflation pressures in view. Federal Reserve Chair Jerome Powell’s upcoming remarks could offer further insight into how policymakers assess the inflation data.