US: Core PCE inflation increased slightly above expectations – Nordea Markets

Anders Svendsen, Research Analyst at Nordea Markets, notes that the US core PCE prices increased by 0.2% m/m in September, slightly faster than expected (Nordea and consensus: 0.1% m/m) after a weak core CPI report for the same month.

Key Quotes

“Correspondingly, core PCE inflation remained unchanged at 2.0% - spot on the Fed’s target.

• Headline PCE prices increased 0.1% m/m and 2.0% y/y, also slightly higher than expected and spot on target.
• Both core CPI and core PCE prices have showed rather weak momentum in August and September, but we find that most can be explained by temporary factors.
• The main negative surprises stem from core goods prices in general and apparel prices more specifically. Core services price inflation is still rising, and we expect more increases going forward as wage growth increases.”