US consumers keep spending briskly even in the face of persistent inflation and high interest rates

WASHINGTON — An inflation gauge that is closely monitored by the Federal Reserve showed price increases remained elevated in September amid brisk consumer spending and strong economic growth.

In a cautionary note, consumers relied increasingly on savings to fuel their shopping last month. Income growth slowed. Adjusted for inflation, income actually fell slightly. September’s month-to-month price increase exceeds a pace consistent with the Fed’s 2% annual inflation target, and it compounds already higher costs for such necessities as rent, food and gas. The Fed is widely expected to keep its key short-term interest rate unchanged when it meets next week. But its policymakers have flagged the risk that stronger growth could keep inflation persistently high and require further rate hikes to quell it.

Spending on services jumped, Friday's report said, led by greater outlays for international travel, housing and utilities. With core prices already at that level, Fed officials will likely believe they can"proceed carefully," as Chair Jerome Powell has said they will do, and monitor how the economy evolves in coming months.

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