US inflation stays elevated but prices increased less than feared

US inflation remained elevated last month as gas prices jumped while the cost of rents cooled, painting a mixed picture of the expenses consumers are facing in a murky economy where growth appears steady but hiring slow.

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Consumer prices increased 3% in September from a year earlier, the labour Department said Friday, the highest since January and up from 2.9% in August. Excluding the volatile food and energy categories, core prices also rose 3%, down from 3./8 in the previous month.

On a monthly basis, price increases slowed: Consumer prices rose 0.3% in September, down from 0.4% the previous month. Core inflation also cooled to 0.2%, from 0.3% in August.

The figures show that inflation continues to rise more slowly than many economists expected when President Donald Trump imposed sweeping tariffs in April. Some of those duties were later reduced as part of trade deals, while many companies have only passed on part of the tariff cost to consumers out of concern that doing so would reduce sales. Businesses may shift more costs to consumers in the coming months if the duties appear permanent.

The smaller increase will come as a bit of relief to Federal Reserve officials, who have signaled that they will cut their key interest rate at their meeting next week for the second time this year.

Yet inflation remains above the Fed's 2% target, underscoring the high stakes of the Fed's moves.