Core PCE +0.2% October and +1.4% YOY, Inflation OK. Savings at +4.4% As Consumers Tighten Back Up.

Overall Personal Consumption Expenditures, the Fed’s favorite measure of consumer inflation, were 0.3% in October and 0.2% year-over-year through October. Excluding volatile oil and food costs from the readings, “Core” PCE price index for October was +0.2% and +1.4% YOY through October. 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 +1.4%, Core inflation is within their comfort zone, especially since Fed chairman Ben Bernanke confirmed tame inflation for a considerable period this summer, and since then inflation has been either down or even.

Personal income increased 0.2% percent in October, and wages were even from last month. Households once again began hoarding cash with Personal Savings Rate rising to 4.4% from an original report of 3.3% for September—the September savings rate has now been revised to 4.6%. This is quite an adjustment but still not close to May’s all-time record savings rate of 6.9%. The average savings rate for the last 12 months is 4.5%. Below are all key details from the Personal Income & Outlays report.