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[WASHINGTON] US inflation was steady in September while consumer spending rose faster than incomes, the Commerce Department reported Monday.
The report was released a day before the start the two-day meeting of monetary policymakers, who are expected to leave rates unchanged at least until next month.
The personal consumption expenditures price index, the measure of inflation most valued by the Fed, rose 0.2 per cent in September, the same increase recorded in August.
Core PCE, which excludes more volatile food and fuel prices, posted a smaller increase, rising 0.1 per cent after a 0.2 per cent increase in August. The result matched a consensus forecast by analysts.
Compared to a year ago, the PCE price index rose 1.2 per cent, below the Fed's 2 per cent target but at its highest level in nearly two years, the data showed.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the data indicate inflation could be set to rise faster than the Fed anticipates.
"Note that headline PCE inflation is now 1.2 per cent, up from 0.2 per cent in September last year, and set to breach 2 per cent in February, as the impact of falling energy prices drops out of the calculation," he wrote in a note to clients.
Personal income rose 0.3 per cent or US$46.7 billion in the latest month, while personal consumption expenditures were 0.5 per cent higher, an increase of US$61.0 billion.
Year-on-year, September saw a 2.1 per cent gain in personal income but personal spending also grew faster, rising 2.4 per cent on an annualized basis for the month.