The consumer price index rose 0.2% last month, after 0.2% in August, the Department of Labor’s Bureau of Labor Statistics reported Thursday.
In the 12 months to September, the CPI grew 2.4%, its smallest year-on-year increase since February 2021 and after an advance of 2.5% in August.
Economists polled by Reuters had expected the CPI to rise 0.1% and 2.3% year-on-year. The annual increase in inflation has slowed from the peak of 9.1% reached in June 2022.
Along with the significant moderation of the US central bank’s inflation measures towards its 2% target, lower consumer inflation allowed the Fed to shift focus to the labor market and implement an unusually large rate cut of 50 basis points in September.
Meeting minutes released Wednesday showed that a “substantial majority” of policymakers supported the start of a less restrictive era, but there appeared to be even broader agreement that the initial move did not commit the Fed to any particular rhythm of casualties.
The first rate cut since 2020 placed the central bank’s official interest rate between 4.75% and 5%. The Fed had raised them 525 basis points in 2022 and 2023.
However, a resilient labor market and strong consumer spending have forced investors to abandon hopes of another half-percentage point rate cut next month.
The economy added the most jobs in six months in September and the unemployment rate fell to 4.1% from 4.2% in August.
Revisions of last month’s national accounts data from 2019 to the second quarter of this year also showed the economy was in much better shape than previously estimated.
There are also some pockets of rigidity, especially rents, which are slowing the rate of cooling of core inflation.
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