Inflation held stubbornly around 3% in September, government data showed Friday, but came in slightly cooler than analysts expected across the board as investors continue to assess the Federal Reserve’s path toward its 2% target.

The latest data from the Bureau of Labor Statistics showed the Consumer Price Index (CPI) rose 3.0% year over year in September, up from 2.9% in August but slightly below economist expectations for a 3.1% increase. That marks the highest reading since May and remains above the 12-month average of 2.7%.

Month over month, prices rose 0.3%, below August's 0.4% rise and also lower than economists' expectations of a 0.4% monthly gain. The increase in prices was driven by stickier gasoline prices last month.

Core inflation, which strips out volatile food and energy costs, rose 3.0% year over year in September, down from 3.1% in August and below economists’ expectations. On a monthly basis, core prices increased 0.2%, easing from August’s 0.3% gain, which was the strongest monthly rise in six months.

Friday's report was delayed by the ongoing government shutdown, now the second-longest shutdown in US history with no end in sight. It marks the first major piece of federal economic data since the shutdown began.

Despite still-stubborn prices in September, markets still expect the Fed to deliver a quarter-point cut at next week's policy meeting, according to the CME FedWatch tool.

This is a breaking news post and will be updated.

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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