The Commerce Department reported this week that the personal consumption price index, the Fed’s preferred inflation measure, increased to 1.2 percent for the 12 months that ended Sept. 30. That was the highest in nearly two years and moved inflation closer to the Fed's annual target of 2 percent.

Core inflation, which excludes often-volatile food and energy prices, held steady in September at 1.7 percent, matching the highest level since mid-2014.

September's rise in spending came after consumers pulled back in August. The 0.1 percent decline that month was the first since January 2015.

Personal income increased 0.3 percent in September after a 0.2 percent rise the previous month. With spending outpacing income growth, the savings rate ticked down. Americans saved 5.7 percent of their disposable income, the Commerce Department said.

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