Inflation Is Expected to Cool Further in a Fresh Report

Consumer Price Index inflation data set for release on Thursday is likely to show that price increases were nearly back to normal in September, the latest evidence that they are coming under control after years of proving painfully quick.The report is expected to show that overall inflation was 2.3 percent on an annual basis, down from 2.5 percent previously.And after stripping out food and fuel costs, which can be volatile from month to month, a “core” inflation measure is expected to hold steady at 3.2 percent.The overall inflation index has been cooling substantially from a peak of 9.1 percent in the summer of 2022.

And both this index and a related measure — the Federal Reserve’s preferred Personal Consumption Expenditures index — have been creeping closer to the 2 percent annual rate that the central bank aims for over time.Recent progress on inflation has been welcome news for the Fed, and has allowed officials to begin dialing back how much they are restraining the economy.Policymakers cut interest rates in September for the first time in more than four years, lowering them by an unusually large half percentage point.While recent data have suggested that both economic growth and the job market are holding up, Fed policymakers have signaled that they expect to lower interest rates further as inflation cools.

They projected in September that they would make two more quarter-point rate cuts this year.“I don’t want to see the economy weaken,” John C.Williams, the president of the Federal Reserve Bank of New York, said in an interview with The Financial Times this week.

“I want to maintain the strength that we see in the economy and in the labor market.”That inflation is falling and interest rates are coming down could be good news for Democrats ahead of the election, bringing relief to consumers who have smarted from years of rising prices.But inflation could still be in for some bumps in coming months.Used car prices are climbing after mo...