Consumer prices increased moderately in September. The Personal Consumption Expenditures price index, which is the Federal Reserve’s preferred inflation gauge, showed a 0.3 percent monthly increase in prices.
Compared with the same time last year, prices were up 2.8 percent, a slightly faster pace than in August, when the year-over-year rate was 2.7 percent. Both the monthly and annual readings for September were in line with analyst expectations.
Consumer spending, the lifeblood of the U.S. economy in several ways, continued to hold up. Personal income increased $94.5 billion overall, registering a solid 0.4 percent monthly rate of growth.
The data is several months old because of the government shutdown, which prevented data collection from taking place. But the numbers will provide the Fed with more data to consider at its policy meeting next week.
For now, market pricing, and recent commentary from Fed officials themselves, suggests the central bank is likely to cut interest rates.
Goods inflation, after easing substantially since 2022, has swung back up since spring.
Still, minutes from a recent Fed meeting showed “most judged that it likely would be appropriate to ease policy further over the remainder of this year,” and that most officials “generally judged” that “downside risks to employment were elevated and had increased.”
Inflation has generally been above the Fed’s official 2 percent target since 2021. Hawkish economic analysts, who are worried about a 3 percent rate of overall inflation becoming the new norm, have emphasized the risks of easing interest rate policy too soon — especially when there are fresh anxieties over whether asset prices are in a bubble.
And yet labor market data shows that while unemployment is still low, hiring levels have substantially deteriorated. Jobless claims, which are measured weekly state by state, have been remarkably low and steady. But new private sector payroll data from ADP has noted a worrying falloff in new hires.
A range of Fed officials, including Christopher J. Waller, a Fed governor, and Susan Collins, who heads the Boston Fed, have said that they plan to be highly attentive to the employment side of their institution’s dual mandate of containing inflation and promoting full employment.
Talmon Joseph Smith is a Times economics reporter, based in New York.
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