PCE index, the Fed’s preferred inflation gauge, rises 2.3% annually

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Inflation continues to rise in the United States, according to the U.S. Department of Commerce’s Bureau of Economic Analysis’s (BEA’s) latest report. The Personal Consumption Expenditures (PCE) price index increased by 0.2% in October. Excluding food and energy, the PCE price index increased 0.3%. The PCE price index is up 2.3% from the prior year, or 2.8%, excluding food and energy. The PCE price index is the preferred inflation gauge of the U.S. Federal Reserve.

In October 2024, prices for goods decreased by 0.1% and prices for services increased 0.4%. Food prices increased by less than 0.1% and energy prices decreased by 0.1%. Compared to the same month, one year prior (October 2023), prices for goods decreased 1.0% and prices for services increased 3.9%. Food prices saw a 1.0% increase and energy prices decreased by 5.9%. 

In terms of income, current-dollar personal income saw a 0.6% increase from the previous month. According to the BEA release, this increase is reflective of increases in compensation, personal income receipts on asstes and personal current transfer receipts.

October also saw a $72.3 billion increase in current-dollar PCE, which reflected an increase of $74.7 billion in spending for services and a decrease of $2.3 billion in spending for goods. Notably, within the category of “services,” the largest contributors were health care and housing. In contrast, largest contributor to the decrease in spending for goods was gasoline and other energy-related goods.

Personal outlays increased $69.8 billion in October. Additionally, personal saving was $962.7 billion and the personal saving rate—which is personal saving as a percentage of disposable personal income—was 4.4%.