Inflation ticked up to 3.6% a day after the Fed held rates

Prices rose 3.6% in the year through September by the measure the Federal Reserve watches most closely, the Bureau of Economic Analysis reported on Oct. 29, up from 3.4% in August. The PCE price index climbed 0.5% in the month alone. Excluding food and energy, core prices rose 0.3% in September and 3.1% from a year earlier, up from 3.0%. The report landed one day after the Fed held its benchmark rate steady and said inflation remains elevated.

Consumers kept spending in dollars and stood still in volume. Personal consumption expenditures rose $113.1 billion, or 0.5%, in September, with $35.1 billion of that on goods and $78.1 billion on services. Adjusted for prices, real spending rose less than 0.1%. Personal income and disposable income each rose 0.2%, and real disposable income fell 0.3%. Personal saving was $911.1 billion, a saving rate of 3.8% of disposable income, down from 4.0% in August and the lowest since October 2022, according to Stock Titan's reading of the data.

On Oct. 28 the Federal Open Market Committee kept the federal funds target range at 3.75% to 4%. The statement described economic activity as expanding at a strong pace, said job gains had kept pace with the workforce and the unemployment rate had changed little, and said the committee would gather more information to judge the policy stance appropriate for a timely return of inflation to its 2% goal. The vote was 10 to 2. Lisa D. Cook and Beth M. Hammack dissented, both preferring a quarter-point increase.

The September report in numbers

• PCE price index: up 0.5% in September, 3.6% over 12 months (August: 3.4%).
• Core PCE: up 0.3% in September, 3.1% over 12 months (August: 3.0%). BEA revised August's monthly core gain up to 0.3% from 0.2%.
• Consumer spending: up $113.1 billion, or 0.5%; real spending up less than 0.1%.
• Personal income: up $54.5 billion, or 0.2%; real disposable income down 0.3%.
• Saving rate: 3.8% of disposable income, from 4.0% in August.

What the Fed is measuring against

The Fed's 2% goal is defined on the PCE index, not the consumer price index. In its September projections the committee put core PCE at 3.4% for 2026, measured as the last three months of the year against the same months of 2025, Stock Titan notes. By that outlet's own arithmetic, core prices would need to rise about 0.33% a month from October through December to reach that figure. Headline CPI for September came in at 3.7%, with gasoline up 9.1% and accounting for more than half of the monthly increase, while core CPI was 2.6%. Core PCE has run above core CPI in every month since November 2025, per Stock Titan.

Three dates matter next: October CPI on Nov. 10, October personal income and outlays on Nov. 25, and the Fed's December meeting with new projections. For anyone setting prices or budgets, September's split is the thing to carry around: a 0.5% rise in what customers spent, almost none of it more stuff, paid for out of a saving rate that is now the thinnest in four years.