U.S. Inflation: Prices Accelerating at Fastest Pace in 30 Years

U.S. Inflation accelerated in October, according to the Commerce Department, with the headline Personal Consumption Expenditures (PCE) index rising 5.0 percent year on year.

It says this is reaching levels not seen since 1990 and reinforcing broader concerns about the persistence of inflationary pressures.

Meanwhile, the core PCE inflation index, which excludes volatile categories such as food and energy and is the Federal Reserve’s preferred inflation gauge for calibrating monetary policy, rose at the fastest rate since 1991 in the year through October, rising at 4.1 percent.

On a month-over-month basis, headline PCE accelerated at 0.6 percent, faster than the 0.4 percent rate in each of the prior three months.

Core PCE also shot up, with October’s month-over-month rate of 0.4 percent coming in at double the rate in September, with both gauges showing inflation picking up its pace and suggesting higher price pressures are more entrenched than Biden administration officials and Fed policymakers expected.

What does it mean?

The PCE inflation data will probably fuel policymaker anxiety, with Fed officials likely to mull accelerating the pace of phasing out the central bank’s massive $120 billion-per-month asset-buying program. At a policy meeting in early November, Fed officials decided to start reducing the monthly bond buys at a pace of $15 billion per month, though they left the door open to a faster schedule. Read More

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