Inflation accelerated in September, bolstering the case against the Federal Reserve’s aggressive rate cut last month.
The Federal Reserve’s preferred measure of inflation, the personal consumption expenditure price index, rose 0.2 percent last month, an increase from the 0.1 percent recorded in August.
Core PCE inflation, which excludes food and energy prices, rose by 0.3 percent, higher than the expected 0.2 percent increase. This was the largest increase in core prices since April.
Compared with a year ago, consumer prices were up 2.1 percent, just slightly ahead of the Fed’s two percent target. Core prices were up 2.7 percent, matching the year over year increase recorded in August.
The Federal Reserve slashed its benchmark rate by a half a percentage point last month, arguing that the threat of inflation was over and the risks to the labor market were intensifying. Since then, however, economic data has suggested that the Fed was wrong about the direction of the economy.
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