September Inflation Accelerates to 3.6 Percent as Fed Weighs Rates

Rising energy costs and persistent price pressures pushed US inflation higher in September, according to data released Thursday by the Bureau of Economic Analysis. The Personal Consumption Expenditures index increased 0.5 percent from the previous month and 3.6 percent from a year earlier, adding to pressure on the Federal Reserve as policymakers consider another interest rate increase in December.

The annual inflation rate remains well above the Fed's target of approximately 2 percent over time. The September figures reinforce evidence that price growth continues to exceed the central bank's preferred pace, according to the Bureau of Economic Analysis report.

Core inflation, which excludes the more volatile food and energy categories, rose 3.1 percent annually in September. On a monthly basis, core prices increased 0.3 percent, matching the gain recorded in August.

The report followed Wednesday's Federal Reserve decision to hold interest rates steady. Officials voted 10-2 to maintain rates after raising them the previous month, with two policymakers dissenting in favor of another increase.

Investors expect the central bank could raise rates again at its final meeting of the year in December, with additional increases possible next year. The latest inflation figures could influence that decision as officials assess whether price pressures are easing sufficiently.

Energy costs have contributed significantly to inflation this year, as the war with Iran disrupted energy supplies through the Strait of Hormuz. The resulting constraints sent oil prices soaring, with higher energy costs spreading across the US economy.

Federal Reserve Chairman Kevin M. Warsh addressed the economic outlook on Wednesday, describing the economy as strong while acknowledging that inflation remained elevated.

Warsh's remarks came as the central bank weighed the timing of further monetary tightening. Wednesday's meeting indicated that policymakers believed they had room to collect additional economic data before deciding whether to increase borrowing costs again.

The Bureau of Economic Analysis report also showed slower growth in personal income. Americans' personal income rose 0.2 percent in September, below the 0.3 percent increase recorded in August.