A key inflation measure was lower than expected in September, the Commerce Department said Friday in a report delayed by the government shutdown that gives a further green light for the Federal Reserve to lower interest rates.
The core personal consumption expenditures price index, which excludes volatile food and energy prices, indicated a 0.2% monthly rise while the annual rate was 2.8%. The monthly rate was in line with the Dow Jones consensus, but the annual level was 0.1 percentage point lower. The core annual rate edged down from 2.9% in August.
In addition, headline PCE increased 0.3% for the month, putting the annual inflation rate also at 2.8%, according to the department’s Bureau of Economic Analysis. Both of those readings were in line with expectations though the annual rate was up 0.1 percentage point from August.
Federal Reserve officials use the PCE price index as their primary policy tool for inflation. While officials look at both measures, they generally consider core a better indicator of longer-term inflation trends.
Goods prices surged 0.5% on the month as President Donald Trump’s tariffs continue to work their way through the economy. Services prices were up just 0.2%. Food rose 0.4% while energy was up 1.7%.
