Federal Reserve’s preferred measure of inflation rose slightly in September

Inflation increased slightly in September after declining in August , new data from the Bureau of Economic Analysis showed Thursday.

The personal consumption expenditures (PCE) price index , the preferred inflation metric for the Federal Reserve, rose by 0.5 percent last month and was up 3.6 percent relative to September 2025.

The Federal Reserve Bank of Cleveland projected PCE inflation for last month at 0.5 percent month-over-month and 3.6 percent relative to September 2025.

Annual inflation, according to the PCE, previously dipped from 3.7 percent in July to 3.4 percent in August.

The price of gas and other energy goods rose by 9.2 percent from August to September, after increasing by 4.4 percent from July to August.

Gasoline and energy costs have risen in six of nine months this year, as the Iran war sparked oil price shocks via the Islamic Republic’s restrictions on shipping in the Strait of Hormuz.

Persistent inflation , which has remained above the Fed’s 2 percent target for five-and-a-half years, spurred central bank officials to hike interest rates by a quarter point in mid-September.

On Wednesday, though, the Federal Open Market Committee (FOMC) voted 10-2 to hold rates at a range of 3.75 percent to 4 percent.

After that decision, Fed Chair Kevin Warsh said the weeks leading up the FOMC’s next meeting in early December will “provide more clarity” on the “appropriate protocol” for the committee regarding monetary policy.

“What we’ve done in this monetary medicine, it’s starting to work some, but there’s no firm conclusions,” Warsh said, referencing the Fed’s rate hike in September. “If we had a firm conclusion about the conduct of monetary policy, we’d announce it to much fanfare today.”