US September PCE price index rises 3.6% year-on-year, supporting expectations for another Fed rate hike in December

The increase in U.S. consumer prices accelerated in September, which could further support the Federal Reserve in raising rates again in December after pausing hikes this week. According to a report released Thursday by the U.S. Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) price index rose 0.5% month-on-month and 3.6% year-on-year in September. The faster pace of price increases further indicates that inflation remains above the level Federal Reserve officials would like to see. The Federal Reserve uses the PCE price index to measure inflation, with a long-term goal of keeping annual increases around 2%. Excluding the more volatile categories such as food and energy, so-called core prices rose 3.1% year-on-year and 0.3% month-on-month in September. The month-on-month increase in core prices in August was also 0.3%. The day before, Federal Reserve officials voted 10 to 2 to hold interest rates steady, with two officials dissenting and advocating for a rate hike. Investors expect that the Federal Reserve may raise rates again at its final meeting of the year in December and could hike multiple times next year.