Christopher Rugaber, Associated Press

Inflation in the United States ticked up in October, driven by costlier rents, used cars, and air fares, a sign that price increases might be leveling off after having slowed in September to their lowest pace since 2021.

The Fed moved in response to the steady decline in the once-high inflation that had angered Americans and helped drive Donald Trump’s presidential election victory.

But excluding volatile food and energy costs, “core” prices remained elevated in September, driven higher by rising costs for medical care and car insurance.

The rate cut comes after more than two years of high rates that helped tame inflation but also made borrowing painfully expensive for American consumers.

With inflation nearly defeated and the job market cooling, the Federal Reserve is prepared to start cutting its key interest rate from its current 23-year high, Chair Jerome Powell said Friday.

Wednesday’s report from the Labor Department showed that consumer prices rose just 0.2% from June to July after dropping slightly the previous month for the first time in four years.

In a better-than-expected report, consumer prices declined 0.1% from May to June after having remained flat the previous month, the government reported Thursday.

With the nation’s households continuing their steady spending, many employers have had to keep hiring to meet their customer demand.

Friday’s report from the Commerce Department showed that an index that excludes volatile food and energy costs rose 0.2% from March to April, down from 0.3% in the previous month.

Measured year-over-year, April inflation ticked down from 3.5% to 3.4%.

The Fed emphasized that inflation has remained stubbornly high in recent months and said it doesn’t plan to cut interest rates until it has “greater confidence” that price increases are slowing sustainably to its 2% target.

Prices outside the volatile food and energy categories rose 0.4% from February to March, the same accelerated pace as in the previous month.

Chair Jerome Powell noted that inflation has cooled considerably but it’s “still too high, ongoing progress in bringing it down is not assured and the path forward is uncertain.”

Compared with a year ago, prices are up 3.1%. That is less than the 3.4% figure in December and far below the 9.1% inflation peak in mid-2022.

After an extended period of gloom, Americans are starting to feel better about inflation and the economy — a trend that could sustain consumer spending and fuel economic growth.