# Fed's Preferred Inflation Gauge Rises to 3.6% in September While Third-Quarter GDP Beats Forecasts at 3.4%

Fox Business reports prices climbed 0.5% on the month and core inflation hit 3.1%, both as expected, while growth came in above the 3.2% economists forecast. Analysts now see a December rate hike as likely.

- Section: [Economy](https://rightnewsrightnow.com/economy/)
- Published: 2026-10-29
- By: RightNewsRightNow Staff
- Canonical page: https://rightnewsrightnow.com/articles/pce-inflation-3-6-percent-september-third-quarter-gdp-3-4-percent-beats-forecast-fox-business/

Two big numbers landed together Thursday morning: inflation is running hotter and the economy grew faster than forecast, Fox Business reports.

Inflation. The Commerce Department said the personal consumption expenditures (PCE) price index rose 0.5% in September and 3.6% from a year earlier, up from 3.4% in August. Core PCE, which leaves out food and energy, rose 0.3% on the month and 3.1% on the year, up from 3.0%. Both readings matched what economists polled by LSEG expected. Goods prices were up 3.9% from a year ago and services 3.5%. The savings rate fell to 3.8% of disposable income from 4.0% in August.

Growth. The Bureau of Economic Analysis put third-quarter GDP growth at an annualized 3.4%, above the 3.2% economists forecast. It is an advance estimate, and two revisions are still to come.

The read. Bret Kenwell, an investment analyst at eToro, said both PCE readings were the highest since May and called inflation "a stubborn issue." He called the GDP report "the bright spot," with personal consumption leading and federal government consumption at its highest level in at least five years. James McCann of Edward Jones said a resilient consumer and an AI investment boom are driving growth "well above trend," and that the numbers may make investors ask why the Fed did not raise rates Wednesday. He expects a return to tightening in December and possibly one more hike in 2027.

The market. The CME FedWatch tool put the chance of a quarter-point December hike at 79.6%, down from 84.2% a day earlier. That would take the federal funds rate to 4% to 4.25%. Early Thursday the S&P 500 was down more than 0.4%, the Dow more than 0.3% and the Nasdaq more than 1.4%.

Note for readers: the forecasts and rate-hike odds are analysts' and market estimates, not certainties. See our earlier story on the Fed's decision for the Wednesday vote.

## Source

Original reporting: [Fox Business](https://www.foxbusiness.com/economy/september-2026-pce-inflation)