Fed's main inflation gauge stays elevated as US spending weakens

The Federal Reserve's preferred measure of inflation changed little in September, likely easing the way to a widely expected interest rate cut by the central bank next week.

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Prices rose 0.3% in September from August, the Commerce Department said in a report that was delayed five weeks by the government shutdown. It matched the increase recorded during the previous month. Excluding the volatile food and energy categories, core prices rose 0.2% in September from August, the same as August, and a pace that if it continued for a year would bring inflation closer to the Fed’s 2% target.

Compared with a year ago, overall prices rose 2.8%, up slightly from 2.7% in August. Core prices also rose 2.8% from a year earlier, a small decline from the previous month's figure of 2.9%.

The data indicate that core inflation was muted in September and will bolster the case for a cut to the Fed's key interest rate at its next meeting Dec. 9-10. Inflation remains above the central bank’s 2% target, partly because of President Donald Trump's tariffs, but many Fed officials argue that weak hiring, modest economic growth, and slowing wage gains will steadily reduce price gains in the coming months.