Inflation remains below the Federal Reserve’s 2 percent symmetric objective, which has been true for most of the past seven years. The price index for core personal consumption expenditures (PCE), which excludes food and energy prices and is a better indicator of future inflation than overall PCE prices, increased 1.7 percent over the 12 months through September. Foreign growth remains subdued.
At the same time, the contribution of domestic demand to growth became increasingly important, supported by fiscal policy (see Figure 11) and sticky wage developments.