Core PCE +0.1% September and +1.3% YOY, Inflation OK. Savings at +3.3% As Consumers Loosen Up Slightly.

Overall Personal Consumption Expenditures, the Fed’s favorite measure of consumer inflation, were 0.1% in September and -0.6% year-over-year through September. Excluding volatile oil and food costs from the readings, “Core” PCE price index for September was unchanged at +0.1% and +1.3% YOY through September. The Fed looks closely at Core PCE excluding food and energy prices because of the price volatility of these two items, and the Fed’s zone for reasonable inflation is 1-2% per year. At +1.3%, Core inflation is within their comfort zone, especially since Fed chairman Ben Bernanke confirmed tame inflation three months ago and since this month is even after three straight declining months. Personal income increased 0.1 percent in September, and wages decreased -0.2%, giving up the +0.2% gains from August. Households have stopped hoarding as much cash bringing the Personal Savings Rate to 3.3%. This is off from July’s figure of 4.2% and May’s all-time record savings rate of 6.9%. The average savings rate for the last 12 months is 4.0%. Below are all key details from the Personal Income & Outlays report.