Key inflation metric rises 0.2% in October, 2.3% annually, in line with expectations

Nov. 27 (UPI) -- Personal Consumption Expenditures inflation in October rose 0.2%, an increase of 2.3% from a year ago. The Wednesday estimate from the Bureau of Economic Analysis was in line with Dow Jones expectations.

"The $72.3 billion increase in current-dollar PCE in October reflected an increase of $74.7 billion in spending for services and a decrease of $2.3 billion in spending for goods," the BLS said in a statement.

"Within services, the largest contributors to the increase were health care (led by hospitals) and housing. Within goods, the largest contributor to the decrease was spending for gasoline and other energy goods (led by gasoline and other motor fuel).

Even though inflation rose and is still above the 2% target set by the Federal Reserve, some traders expect rate cuts are from the Fed in December.

According to FedWatch odds of a quarter-point cut were at 66% Wednesday morning.

Inflation ticked up in October compared with the 2.1% increase in September.

"It emphasizes a reality about the inflation data, which is that inflation progress has stalled," said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.

There's some uncertainty among investors as to whether the Fed will be able to cut rates in December, and if so, by how much.

A big uncertainty is President-elect Donald Trump's plans to impose steep tariffs on goods imported into the United States.

Economists at Deutsche Bank said in a Tuesday analysis that if Trump imposes large tariffs on Canada and Mexico that would most likely raise PCE inflation above 3% in 2025.

National Economic Adviser Lael Brainard released a statement through the White House, saying she hoped the progress wouldn't be squandered "with sweeping policies that would raise prices" for middle-class families.

"After a hard-fought recovery, we are making progress for working families," Brainard said. "Gas prices are close to $3 per gallon -- the lowest for any Thanksgiving week since the pandemic -- and the cost of a Thanksgiving meal has fallen two years in a row, providing needed relief during the holidays."

Household incomes are up almost $4,000 more than prices during this administration, Brainard added, saying the progress should be used to advance measures reducing the costs of things such as housing and medicine.