Inflation Falls To Lowest Level Since January

The hotly anticipated PCE inflation print wasn’t too hot nor was it too cold. In fact, it was just as economists had projected, according to the latest data from the Bureau of Economic Analysis.

  • Y-O-Y: The Personal Consumption Expenditure price index was up 6.0% compared to October 2021, this is lower than last month’s 6.3% reading and is the lowest level since January.
  • M-O-M: Prices were up 0.2% for the month, less than half of September’s 0.5% increase and the lowest level since July.

Core PCE. The Core price index was up 0.2% month-over-month and 5.0% year-over-year. The monthly data was slightly better than economist projections (0.3%) but they hit the nail on the head with the annualized number.

Spending. Personal spending rose 0.8% in October, this is up from the 0.6% increase in September and is the highest since June.

  • The biggest driver was in the automotive category which was responsible for 25% of the spending increase in October.
  • Food services took the number two spot with 18.3% followed by housing (13.3%) and energy (12.9%).

Income. The increase in spending was propelled by a 0.7% increase in personal income, this is up from the 0.4% reported last month and the highest level since February.

Analysis. Ben Casselman at the New York Times wrote on Twitter, “The continued strength of real consumer spending is pretty remarkable. Accelerating over the past few months as inflation has eased.”