Still, the pace of overall inflation is likely to boost confidence in the economy's direction
Overall inflation is still rising at its slowest annual pace for more than three years – but core inflation, viewed by many economists as a better way to judge underlying price pressures, saw a bigger increase than expected in September.
Government data released Thursday showed the core consumer price index, a gauge which does not account for food and energy costs, ticked 0.3% higher month over month and was up 3.3% compared with the same time last year.
That contrasted with monthly growth of 0.2%, and a 2.4% annual increase, in the overall consumer price index (CPI), with lower energy prices helping lower cost pressures elsewhere.
The jump in core inflation, coupled with a jobs report last week that suggested a still-resilient labor market, indicate plenty of work ahead for the Federal Reserve in its efforts to restore economic balance.
Falling inflation in recent months and early signs of an economic cooldown prompted the Fed to get its rate-cutting path underway with a 50-basis-point reduction in its most recent rate decision.
Persistent core inflation may give it pause for thought in weighing up the size of its next cut – but the mild pace of overall inflation is likely to boost confidence that the economy is moving in the right direction.
Inflation has emerged as a key issue for voters as Vice President Kamala Harris prepares to face off against former president Donald Trump in November’s presidential election.
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