US inflation hits 3% for first time since January

US inflation hit 3% for the first time since January last month, but remained milder than many analysts had expected.

The figure was for an increase in consumer prices the year to September, up from 2.9% in the prior month, the Labor Department said. Analysts had forecast a 3.1% jump.

The report is the first official piece of economic data the US government has published since shutting down earlier this month.

It comes days before the US central bank is due to vote on its next cut to interest rates and bolstered bets that policymakers would decide to lower borrowing costs again.

From August to September, prices rose 0.3%, moderating a bit from the 0.4% jump in the prior month.

"The tariff pass through generally remains muted," said Olu Sonola, head of US economic research for Fitch Ratings, saying the figures would bring a "sigh of relief for the Fed".

"As odd as it may seem, the Fed will be happy with inflation staying around 3% for the next couple of months," he said.

The Federal Reserve typically raises interest rates when it wants to stabilise prices and lowers them when it believes the economy needs a boost to keep employment stable.

But it is currently facing an economy showing signs of both problems.

Hiring has slowed in recent months, while prices continue to rise faster than the bank's 2% target rate, pushed up in part by the Trump's administration's policies such as tariffs.

Furniture prices, for example, rose 3.8% over the 12 months to September, rising 0.9% over the month.

But though inflation has ticked up, it has remained more limited than analysts had initially forecast, as firms hesitate to pass the full cost of the new border taxes onto their customers in the form of higher prices.

The Labor Department recalled workers that had been put on unpaid leave due to the shutdown to publish the report, which is used to help calculate cost-of-living adjustments for the social security retirement programme.

Most categories showed price increases, with some food items showing some of the biggest spikes.

Beef prices, for example, have climbed more than 14% since September 2024, while coffee prices have jumped nearly 19%.

Rents rose 3.5% in the year to September, the same as the prior month.