An inflation gauge closely watched by the Federal Reserve has dropped to near prepandemic levels. The Commerce Department reported that prices rose just 2.1% in September from a year earlier, down from a 2.3% rise in August. That is barely above the Fed’s 2% inflation target and is in line with readings in 2018, well before prices began surging after the pandemic recession. On a monthly basis, prices inched up 0.2% from August to September, up slightly from a 0.1% increase from July to August. Yet some signs of inflation pressures remained. Excluding volatile food and energy costs, so-called core prices rose 2.7% in September from a year earlier, unchanged from August. On a monthly basis, core prices rose 0.3% from August to September, up from just 0.1% from July to August. The increase in the core rate is higher than the Fed would prefer, and if it remains stubbornly elevated, it could lead the central bank to slow its pace of rate cuts in the coming months. Still, for the past six months, core inflation has declined to a 2.3% annual rate, down from 2.5% in August. Economists expect the Fed to cut its key rate by a quarter-point when it meets next week. Read the full article. Take Our Poll