Inflation has slowed further and is just a hairs breadth from the Federal Reserves 2% target.The Personal Consumption Expenditures price index, which is the Feds preferred inflation gauge, showed prices rose 2.1% for the year ended in September, a slowdown from 2.3% in August, according to Commerce Department data released Thursday.The annual increase, which marks a fresh three-and-a-half-year low, fell right in line with what economists were expecting, according to FactSet consensus estimates.The latest inflation reading provided further confirmation that these atypically high price hikes have been tamed, fueling expectations for the Federal Reserve, which has a meeting next week, to continue cutting interest rates.Fridays report also contained even more good news for Americans and economic activity: Incomes continue to grow, and consumers continue to spend and keep the economy churning.The die is more or less cast for a rate cut next week, and the totality of the incoming data weve seen thus far this week supports that decision, Olu Sonola, head of US economic research at Fitch Ratings, said in commentary issued Thursday. The bottom line is that the labor market remains strong, inflation is broadly disinflationary with some bumps along the road, and economic growth is solid.On a monthly basis, prices rose 0.2%, boosted in part by rising food prices, according to the report. However, falling gas prices helped to keep the lid on any gains.Many states are seeing gas prices below $3 a gallon, a trend thats expected to continue in the coming weeks as global supply eclipses demand.Given that gas and food prices can be quite volatile and heavily influenced by aspects such as weather, war and disease, a closely watched measure of underlying inflation excludes those two components: The core PCE price index rose 0.3% in September to hold pat at an annual rate of 2.7% for the third month in a row.