Consumer inflation of 6.2% Y/Y in September eases slightly more than expected

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September Personal Income and Outlays: Income +0.4% M/M vs. +0.3% expected and +0.4% prior (revised from +0.3%), the Commerce Department reported on Friday.

Personal spending: +0.6% M/M vs. +0.4% expected and +0.6% prior (revised from +0.4%).

PCE Price Index: +0.3% M/M vs. +0.3% expected and +0.3% prior.

+6.2% Y/Y vs. +6.3% expected and +6.2% prior.

Core PCE Price Index: +0.5% M/M vs. +0.5% expected and +0.5% prior (revised from +0.6%).

+5.1% Y/Y vs. +5.2% expected and +4.9% prior.

The price data reflects a shift in inflation to the services sector. Prices for goods fell 0.1% during the month, due to a decrease in prices for nondurable goods, chiefly gasoline and other energy. Food prices, though rose 0.6%, while energy prices fell 2.4%.

Prices for services increased 0.6%, led by housing and transportation services.

Former Treasury Secretary Lawrence Summers said he doesn't see the factors driving inflation will reverse anytime soon. "The most important transitory factor affecting today's PCE figure is the NEGATIVE effect of the sharply rising dollar," he said via tweet.

In the past year, the U.S. Dollar Index (DXY) has risen almost 19%.

Federal Reserve officials have said they'll need several months of evidence that inflation is retreating toward the Fed's 2% goal before they start slowing their policy tightening. Traders are now expecting the central bank to step down to a 50-basis point hike in December after a 75-bp increase next week. The CME FedWatch tool has a 51.5% probability of a 50-bp increase in December and a 41.5% probability of another 75-bp hike.

Another data point the Fed pays attention to when setting policy, the Employment Cost Index, rose 1.2% Q/Q in Q3, in line with consensus.

On Thursday, Q3 GDP grew 2.6%, topping consensus, PCE price index growth slows to 4.5%.