Key inflation measure that the Fed follows rose 0.2% in October, less than expected

Inflation rose in October about in line with estimates, sending a sign that price increases at least are stabilizing, the Commerce Department reported Thursday.

The core personal consumption expenditures price index, a gauge that excludes food and energy and is favored by the Federal Reserve, rose 0.2% for the month and was up 5% from a year ago. The monthly increase was below the 0.3% Dow Jones estimate, while the annual gain was in line.

While the Fed takes in a broad range of measures to gauge inflation, it prefers the PCE index as it takes into account changes in consumer behavior such as substituting less expensive goods for pricier items. That’s different than the consumer price index, which is a raw measure of changes in prices.

Policymakers view core inflation as a more reliable measure as food and energy prices tend to fluctuate more than other items.

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