U.S. consumer prices increased in September amid higher costs for rent and gasoline, but underlying inflation is slowing, supporting financial market expectations that the Federal Reserve would not raise interest rates next month.
The consumer price index increased 0.4% last month, the Labor Department said on Thursday. The CPI jumped 0.6% in August, which was the largest increase in 14 months.
Inflation remains above the Fed's 2% target, 18 months after the U.S. central bank started hiking rates. Violence in the Middle East is also seen discouraging the Fed from tightening monetary policy further, though it has led to Treasury yields pulling back from 16-year highs. Since March 2022, the Fed has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits were unchanged at a seasonally adjusted 209,000 for the week ended Oct. 7. Economists had forecast 210,000 claims for the latest week.
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