WSJ: U.S. Inflation Picked Up to 3% in September

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Annual inflation picked up slightly in September as consumers continued to feel the strain from rising prices.

Consumer prices rose 3.0% in September from a year earlier, the Labor Department said Friday, hotter than August’s increase of 2.9%.

Economists surveyed by The Wall Street Journal had expected a rise of 3.1%.

Core prices excluding the volatile food and energy categories rose 3.0%, below forecasts for a 3.1% increase.

Economists and policymakers are paying close attention to the latest inflation report for clues on the state of the economy and the direction of interest rates. Hiring slowed to a crawl during the summer, prompting the Federal Reserve to cut interest rates in September. The report is out more than a week late because a government shutdown has stopped work on economic data. The government decided to issue the inflation report, which is needed to determine cost-of-living increases for Social Security payments. Jobs data is still on hold.

Inflation has remained above the Fed’s target of 2%, and some economists worry price growth could pick up again if rates fall too low. Tariffs have pushed up the prices of some imported goods such as furniture.

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Fed officials are expected to cut rates again at their meeting next week. But they are divided over how far to cut, and whether to give priority to boosting employment or fighting inflation. Trump, who has been pushing for control of the traditionally independent Fed, has said he favors aggressive rate cuts to lower mortgage rates and interest payments on government debt.

Fed Chair Jerome Powell said earlier this month that he is trying to avoid cutting rates too early while also supporting the labor market. “There really isn’t a risk-free path now, since [inflation] appears to be continuing to increase quite gradually…but now the labor market has demonstrated pretty significant downside risks,” he said at a conference.

Employers added just 22,000 jobs in August, the latest month for which Labor Department data is available. More recent data from Bank of America, payroll processor ADP and a number of surveys suggest hiring remained weak in September.

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