Core Personal Consumption Expenditures (PCE), which excludes volatile food and energy prices, rose for the fifth straight month to 3.62% versus the prior month’s unrevised reading of 3.5%. With inflation rising further beyond the Federal Reserve’s 2.0% target rate, some Fed officials have recently expressed support for tapering asset purchases by year-end. This course of action was also supported by Jerome Powell’s speech at the Fed’s Jackson Hole symposium last week, yet he also stated that the central bank is not planning to raise interest rates in the near future. Yet, with the extreme rise in housing costs starting to be reflected in the shelter component of core PCE, inflation could end up being more persistent than the Fed expects.
