US PCE Inflation Accelerates to 3.6% in September as Fed Signals December Rate Hike

U.S. inflation accelerated in September, with the Personal Consumption Expenditures Price Index rising 0.5% month-over-month and 3.6% year-on-year, up from 3.4% in August, the Commerce Department's Bureau of Economic Analysis said Thursday. The reading, in line with economist expectations, strengthens the case for a Federal Reserve rate increase in December. Core PCE, excluding food and energy, rose 0.3% for the month and 3.1% year-on-year. The Fed held its benchmark rate at 3.75%-4.00% on Wednesday, with Chairman Kevin Warsh noting energy prices have moved higher again. CME's FedWatch Tool showed markets pricing an 84.6% chance of a December hike. Consumer spending rose 0.5% in September after a 0.9% August gain, though it was flat when adjusted for inflation. The data accompanied an advance third-quarter GDP report showing 3.4% annualized growth, with spending up 3.8% for the quarter.