A US inflation measure closely watched by the Federal Reserve posted its biggest year-on-year jump since the 1990s last month, adding to pressure on President Joe Biden as his White House scrambles to tame rising costs.
The commerce department’s core personal consumption expenditure index, which strips out volatile food and energy costs, rose 4.1 percent in October compared with a year ago.
The jump represents a significant increase from the 3-7 percent annual rise in September, and was in line with consensus forecasts.
When energy and food prices are included, the PCE price index rose 5 percent compared with October 2020, faster than the 4-4 percent rise in September. The data were released as part of a report that also showed personal income rising 0.5 percent in October compared with the preceding month, while consumption rose 1.3 percent.
Battling high prices has become a central focus for Biden’s economic team after recent data showed US consumer price growth jumping at the fastest pace in roughly three decades, confounding hopes that inflationary pressures would be short-lived.
This month, the Fed began winding down its monthly $120bn asset purchase program, the pace of which suggests it could end in June 2022.
Minutes of the Fed monetary policy committee’s November meeting, also released on Wednesday, showed that officials “stressed that maintaining flexibility” was important as the program is gradually eased, with certain committee members advocating that the central bank more quickly tighten policy in the face of strong inflation.
Some policymakers said at the meeting that they believed a speedier taper would put the committee “in a better position” to tweak policy in light of high inflation. But the minutes on the whole did not indicate a committee biased towards an acceleration, with “a number of participants” stressing a “patient attitude”.