Inflation cooled in September; CPI up 2.4% on year
Summary
The consumer-price index rose 2.4% from a year earlier, the Labor Department said Thursday, after rising 2.5% in August.U.S. inflation weakened in September, extending a streak of cooler readings.
The consumer-price index rose 2.4% from a year earlier, the Labor Department said Thursday, after rising 2.5% in August. Core prices, which exclude volatile food and energy items, climbed 3.3% over the previous 12 months, slightly hotter than the 3.2% rise in August.
Economists surveyed by the Wall Street Journal expected consumer prices to rise 2.3% in September, and core prices to rise 3.2% from a year earlier.
Thursday’s report could play an important role in what Federal Reserve officials decide to do with interest rates. Investors have been rethinking the near-term future path of short-term rates.
The Fed has a dual mandate to promote both full employment and stable prices. Over the past few years, its focus has been squarely on high inflation. It raised rates aggressively throughout 2022 and 2023.
But inflation has trended lower over the past year. And initial data this summer raised concerns about a weakening labor market, refocusing the Fed on jobs data.
In mid-September, the central bank cut interest rates by a half-percentage point in response to a cooling labor market and considerable progress on inflation. Most officials penciled in the equivalent of two more quarter-point cuts this year.
Then, Friday’s most recent jobs report and revisions from prior months suggested that demand for workers is anything but weak. The Labor Department last week reported that hiring picked up strongly in September and the unemployment rate fell to a three-month low of 4.1%. Wages increased 4% in September from the prior year, up from 3.9% in August.
The unexpectedly strong report helped allay concerns about the labor market, but raised questions about how much the Fed will need to cut rates. Several officials have said they expect to continue lowering interest rates, though the timing and pace of cuts remains an open question. Fed Vice Chair Philip Jefferson said Wednesday he would prefer “to make decisions meeting by meeting."
Write to Harriet Torry at harriet.torry@wsj.com
