Personal Consumption Expenditure for September 2021 shows high inflation rate is continuing.

The Personal Consumption Expenditure (PCE) inflation index increased 0.6% October 2021.  This is a jump from the 0.4% in July, August, and September.  The 0.6% matches the increase in March and April.

The core PCE inflation rate was 0.4% in October which is in the middle of the range from March 2021 through September.

This indicates inflation is continuing and perhaps accelerating.

The cumulative 12 month change, according to BEA, has risen to 5.0% for the 12 months through October 2021, compared to 4.2% for the 12 months ending September.

Various reports (see Daily Wire for example) indicate this is the highest inflation rate reported by the PCE since 1991. That is a 30 year record.

The PCE is the inflation index preferred by the US Federal Reserve. One unique aspect of the PCE is the numbers are routinely revised. This means prior month’s numbers will shift, sometimes by substantial amounts.

Graph at top of this post shows the monthly change in PCE, including the main index and the core index excluding food and energy.

Inflation, as measured by PCE, started increasing in December 2020. There has been high inflation since then.

The Bureau of Economic Analysis updates their calculation of the year over year change as each month’s data is revised. Their calculation of year over year inflation:

The unsettling part of the high inflation numbers since the first of the year is what happens if that rate of inflation is sustained over the course of a year. Let’s consider that unsettling idea.

Following graph shows an average of the last three months change with an annualization of the three month average.

This shows that since March we experience inflation running from just under 5% up to just under 7%. Inflation at annualized rate of 5% or higher since Spring 2021 is quite distressing.

For more background on PCE, check out previous post Monitoring inflation through the Personal Consumption Expenditure (PCE) price index.

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