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Fed Inflation Gauge Speeds To 30-Year High, October Consumer Spending Leaps

The Fed's preferred inflation gauge sped to 30-year high last month, as consumer spending surged and incomes improved amid consistent gains in the job market and supply chain disruptions.

The Federal Reserve's preferred measure of U.S. inflation surged faster last month, but largely matched market forecasts as consumer spending ramped higher amid sustained improvements in the job market and higher shop-floor prices.  

The core October PCE Price Index rose 4.1% from last year, the Bureau of Economic Analysis reported, faster than the upwardly revised tally of 3.7% for September and largely in line with Wall Street forecasts but still adding to investors concerns about the sticky nature of consumer prices. The monthly increase was 0.4%, again matching Street estimates.

The headline PCE index was up 0.6% on the month and 5% on the year, the highest since 1991. Personal income rose by a stronger-than-expected 0.5%, while personal spending rose 1.3%, the BEA noted, a tally that also beat economists' forecasts.

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U.S. stocks pared some of their earlier declines following the data release, with the Dow Jones Industrial Average marked 125 points lower while the S&P 500 down 15 points. The Nasdaq Composite was marked 90 points lower. 

Benchmark 10-year notes were little-changed at 1.677% while the dollar index was pegged 96.864 against a basket of six global peer currencies.

Earlier this month, the BLS said U.S. consumer price inflation accelerated at the fastest pace in more than three decades -- 6.2% --  while noting that core inflation, which strips out volatile food and energy costs, sped of 4.6% thanks to notable bumps in used car prices and rental costs.

The surge in consumer prices didn't slow retail sales, however, which rose for a third consecutive month in October by 1.7% to a record high $638.2 billion. Stripping out auto and gasoline sales, October retail sales were up 1.4%, the Commerce Department report noted, compared to a Street consensus of 1%.