Fed-watched inflation gauge falls to early 2021 level

Inflation is closing in on pre-pandemic levels.

An inflation gauge closely watched by the Fed falls to its lowest level since early 2021.

Government data reports a 2.1% rise in prices in September from a year earlier, close to pre-pandemic levels.

The big picture: Core prices rose by 2.7% in September, higher than the Fed’s 2% target, but have slowed down over the past six months.

  • Economists expect the Fed to cut its key rate by a quarter-point in the upcoming meeting.
  • Workers’ wages and benefits grew by 0.8% in the July-September quarter, the slowest pace in three years.
  • Despite the economic improvements, some voters remain concerned about high prices and the state of the economy.

Flashback: Inflation peaked at 7.1% in June 2022 and has steadily cooled over the past two years.

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