Federal Reserve’s preferred measure of inflation rose slightly in September
A 0.5 percent monthly jump in the PCE index is not a rounding error, even if it follows a dip in August. It puts the yearly rate at 3.6 percent, which is still well above the Fed's 2 percent target, and it lands right as the central bank is trying to decide whether to pause or push rates higher. Anyone who thought inflation was on a smooth downward glide has to reckon with a bump in the road.
What I find interesting is how this story gets framed depending on who's telling it. For the Fed's hawks, September is proof that the job isn't done and that another hike is justified. For doves, it's one month after a decline, and the trend over time still points downward. Both readings are defensible with the same data, which is exactly why this debate won't settle quickly.
I'd want to know what the core PCE number did, since that strips out food and energy and gives a cleaner sense of underlying pressure. Without that breakdown, a single headline number only tells part of the story. My honest take is that this keeps the Fed on hold for now, but it raises the stakes for the next few months of data.