Fed's preferred inflation gauge shows further signs of price increases cooling

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'Core' PCE, which excludes the volatile food and energy categories, grew 3.7% in September from the year earlier period, down from a revised 3.8% in August

The Federal Reserve's preferred inflation metric showed prices continued to cool in September — a critical data point the Federal Reserve will consider as it weighs its next interest rate decision on Nov. 1.

The core PCE figure "reflects the stickiness of core services inflation, which is still too strong to be consistent with inflation falling back to the Fed's 2% target," Oxford Economics lead economist Michael Pearce wrote in reaction to the data. "While we estimate there is still a considerable stock of excess saving left over from the pandemic, that is now mostly concentrated among higher income households and appears to be increasingly treated as wealth, so we expect the boost to spending from lower saving to wane from here. We also expect some increase in precautionary saving as the job market slows."The price of goods edged up 0.9% in September from a year ago, higher than August's 0.7% rise.

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