US Fed's Favored Inflation Gauge Cools in September

The U.S. Federal Reserve's preferred inflation measure cooled further last month and now sits just above its long-term target, according to government data published Thursday, shortly before the presidential election.

The personal consumption expenditures (PCE) price index eased to 2.1% in the 12 months to September, down from 2.3% in August, the Commerce Department announced in a statement.

This was in line with the median forecast from economists surveyed by Dow Jones Newswires and The Wall Street Journal, keeping the Fed on track to hit its long-term target of 2% in the not-too-distant future.

Given the surge in post-pandemic inflation, the fact that headline inflation now sits just a tenth of a percentage point away from the Fed's target is a significant achievement.

But despite the Fed's progress in bringing down the rate at which prices are rising through high interest rates, U.S. consumers remain unhappy with the cost of living in recent years, and the topic remains front of mind for many voters ahead of the election on November 5.

Both the Democratic candidate, Kamala Harris, and Republican contender, Donald Trump, have floated proposals they say will help bring down the cost of essential everyday items like food and gas.

The PCE price index rose by 0.2% between August and September, the Commerce Department said. This was in line with economists' expectations.

But excluding the volatile food and energy segments, the core PCE price index was unchanged at 2.7% from a year ago in September, slightly above expectations.