Fed’s Favorite Indicator Shows Inflation Getting Hotter

A key measure of inflation in the U.S. economy showed prices rising more rapidly in September than they have in seven months.

The Personal Consumption Expenditures price index—which is the Federal Reserve’s preferred measure of prices—was up by 6.2 percent in the year through September, matching the year-over-year pace recorded the prior month, Commerce Department released Friday showed. Core PCE inflation, which strips out food and fuel, prices increased by 5.1 percent over the past year, the fastest pace of inflation since March.

Compared with the prior month, PCE prices were up 0.3 percent, matching the August figure. Core prices were up 0.5 percent for the second consecutive month.

The figures, which were in line with what economists expected, indicate that the Federal Reserve’s aggressive rate hikes have not yet tamed inflation. The Federal Reserve aims to bring inflation measured by the PCE price index down to two percent.