US inflation gauge ticks higher with price pressures still stubborn

WASHINGTON — Consumer price increases accelerated last month, the latest sign that the steady decline in inflation over the past two years has stalled.

According to the Federal Reserve’s favorite inflation gauge, consumer prices rose 2.3% in October from a year earlier, the Commerce Department said Wednesday. That’s up from just 2.1% in September, but still only modestly above the Fed’s 2% target.

But excluding volatile food and energy categories, so-called “core prices” also rose 2.8% last month from a year earlier, up from 2.7% in September. Economists keep a close eye on core prices because they usually provide better insight into the direction of inflation.

By the Fed’s preferred measure, inflation has fallen sharply since peaking at 7% in mid-2022. Yet annual core inflation has remained stuck at 2.8% since February. Price increases have remained high in the services sector, including apartment rentals, restaurant meals and car and home insurance.

Wednesday’s report also underscored that Americans’ incomes and spending remained healthy, a key driver for the economy continued to grow this year despite widespread fears of a slowdown. Incomes rose 0.6% from September to October, faster than economists expected, while consumer spending rose a solid 0.4% last month.