Fed's Most-Watched Inflation Indicator Ticks Up In October - Still Well Below Mandate

The Fed's most-watched inflation indicator - Core PCE - has been on a downward trend since short-term peaking in January (and yet the need to keep hiking rates has remained). However, October's 1.4% rise (as expected) offers some hope to Janet, Jay, and their friends that an inflection point has been reached in the transitory disinflationary spiral.

As Bloomberg notes, the central bank’s preferred price gauge, excluding food and energy, rose 0.2 percent in October from the prior month.

September’s monthly gain was revised upward to 0.2 percent from 0.1 percent, making for the fastest consecutive increases since January and February.

Including all items, prices rose 1.6 percent from a year earlier following an upwardly revised 1.7 percent; the so-called core measure was up 1.4 percent for a second month.

While the latest figures indicate progress toward the Fed’s 2 percent goal, inflation remains below target on an annual basis, as it has for most of the past five years.