US Inflation Cools in September, Strengthening Bets on Fed Rate Cut

US consumer prices rose less than expected in September, adding to signs that inflationary pressures are continuing to ease. The Consumer Price Index increased 0.2% from the previous month, below economists’ forecast of 0.3%, according to the latest data. On a year-over-year basis, the report points to a slower pace of price growth than earlier in the cycle, reinforcing the view that inflation is gradually moving closer to the Federal Reserve’s target.

Core CPI, which excludes volatile food and energy costs, also came in softer than expected, rising 0.3% in September. That reading suggests underlying price pressures remain present but are not accelerating as quickly as many analysts had anticipated.

The cooler-than-expected inflation report is likely to support expectations that the Federal Reserve could cut interest rates in November, especially if upcoming labor market and spending data continue to show moderation. Markets have been closely watching inflation trends for clues about the central bank’s next move, and this report adds to the case for a more accommodative policy stance.

While one month of data does not define the broader trend, September’s CPI release offers fresh evidence that the post-pandemic inflation surge is continuing to fade.