The Labor Department said Thursday morning its measure of consumer prices rose in September at a 2.4 percent pace, more than that forecast by the market. The consumer price index–the most important barometer of the cost of goods and services–rose 0.2 percent for the month, forecasters estimated at Dow Jones.

That beat Dow Jones’s consensus by 0.1 percentage point. The annual rate for inflation eased a little bit in August but stayed at its lowest level since February 2021. The corresponding core inflation, which does not include food and energy, was 0.3% for September, sending the yearly rate up to 3.3%, a 0.1 percentage point advance overestimates.

A good deal of the inflationary pressure is derailed by a 0.4 percent increase in food prices and a 0.2 percent rise in shelter costs, but this is somewhat offset by a colossal decline in energy costs of 1.9 percent, the Bureau of Labor Statistics found. Other products that are contributing to inflation are a 0.3% rise in prices of used automobiles, a 0.2% rise in prices of new autos, a 0.7% advance in prices of medical care services, and an impressive 1.1% advance in prices of apparel.

Equities dropped after the release, and Treasury yields were mixed. The report comes as the Federal Reserve has just lowered benchmark interest rates in response to a half-percentage point cut in September. The market increasingly believes the Fed will make another quarter-point cut when the central bank next meets to set policy on Nov. 6-7. The CME Group’s FedWatch gauge shows that the probability of that move is currently around 86%.

On the labor side, initial claims for unemployment rose more than expected to 258,000 for the week ending October 5, the highest level since early August, and well above a forecasted 230,000. Continuing claims were up as well, to 1.861 million. This information has heightened concern on the part of Fed officials about the direction of the labor market, which they still generally believe is coming steadily back to the central bank’s 2% inflation target. The upward trend appears to be sustained, especially on food items such as eggs and butter, which may indicate persistence in inflationary pressures.

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