Hopes that the Federal Reserve will cut interest rates when it meets next week were bolstered Friday when the U.S. Bureau of Economic Analysis (BEA) released a key inflation measure that came in better than analysts had expected.
The BEA report for September, which had been delayed by the federal government shutdown, shows that the personal consumption expenditure (PCE) price index increased 0.3% from August. From the same month one year ago, the PCE price index for September increased 2.8%.
More importantly, the Fed-favored “core” PCE price index, which excludes the volatile food and energy components, rose 2.8% over the past 12 month. Market analysts had expected a 2.9% matching August’s increase from July.
The core PCE price index increased 0.2% in September, compared to a month earlier.
“The slightly stale September inflation report shows that prices remained reasonably stable despite tariffs and healthy consumer spending. This probably provides further air cover for the Fed to cut rates in December,” Global X’s head of investment strategy. Scott Helfstein, told CNBC.
The PCE price index, released each month in the Personal Income and Outlays report, reflects changes in the prices of goods and services purchased by consumers in the United States. Quarterly and annual data are included in the GDP release.
Personal income and outlays data for the months of July, August, and September 2025 will be updated with the initial estimate of Gross Domestic Product for the third quarter of 2025 on December 23, 2025.
