Fed's favored inflation gauge showed price growth continued to slow in September

Published On Oct 31, 2024, 8:35 AM

In September, the Personal Consumption Expenditures (PCE) index, a key inflation measure closely monitored by the Federal Reserve, showed signs of slowing. The overall PCE increased by 0.2% for the month and 2.1% year over year, aligning with economists' expectations. The core PCE, which omits volatile food and energy prices, rose by 0.3% month over month and 2.7% over the year. This trend suggests that inflation is moving closer to the Fed's target of 2%, with notable declines in goods prices and a modest increase in services prices. Wages remained stable but showed slower growth compared to earlier months, indicating a potential cooling in inflation pressures.

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The slowing inflation indicates that the Federal Reserve may be reaching its targeted inflation rate, which could influence future interest rate decisions. A positive outlook is likely for sectors sensitive to economic growth, particularly consumer-oriented stocks. With increased consumer confidence stemming from wage growth, sectors such as consumer discretionary may benefit.

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