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Key Fed inflation figure up 4.1% year on year, highest since January 1991

Inflation rose sharply in October, accelerating at its fastest pace since the early 1990s, according to a Commerce Department assessment released Wednesday that is being followed closely by Federal Reserve policymakers.

Prices for personal consumption expenditure excluding food and energy rose 4.1% from a year ago, with the last higher basic reading in January 1991. The Fed prefers this measure because it excludes volatility than it does. both categories can show.

The reading matched the Dow Jones estimate.

Including food and energy, the PCE index rose 5%, the fastest gain since November 1990.

The surge in prices was accompanied by an increase in the amount spent by consumers, which rose 1.3% for the month, above the estimate of 1%. This was accompanied by a 0.5% increase in personal income, which was well above the estimate of 0.2%.

Inflation continued to be reflected primarily in soaring energy costs, which rose 30.2% from a year ago, while food prices rose 4.8% over the year. during the period. Inflation for services rose 6.3%, as in September, while inflation for goods jumped 7.3%, from 6.4% the previous month.

Personal savings totaled $ 1.32 trillion for the month, as the rate of 7.3% as a percentage of personal disposable income fell from 8.2% in September, when savings stood at 1 , $ 48 trillion.

Fed policymakers have been grappling with more aggressive and persistent inflation than they expected. Officials said they believe inflation is at the point where they can start to gradually reduce the amount of monthly stimulus they provide through bond purchases, but markets predict that rates will interest may also need to increase soon.

Traders are now anticipating three 25 basis point rate hikes in 2022, with the odds rising following the 10 a.m. ET inflation report. Fed officials have said they expect at most one hike next year, although that could change at the Federal Open Market Committee meeting in December, when officials release their latest rate forecasts. , unemployment and GDP growth.

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