By Harriet Torry and Nick Timiraos

U.S. inflation eased to a new three-year low but is cooling more slowly than expected, new data showed.

The consumer-price index rose 2.4% from a year earlier in September, the Labor Department said Thursday, after rising 2.5% in August. That was higher than the 2.3% rise that economists polled by The Wall Street Journal had expected.

Core prices, which exclude volatile food and energy items, climbed 3.3% over the previous 12 months, slightly hotter than the 3.2% rise in August. That was also above expectations.

Stocks fell, with the Dow Jones Industrial Average slipping about 58 points, or 0.1%. On Wednesday, both the Dow and the S&P 500 had hit records.

Thursday's report is the last CPI before Election Day and illustrates the challenge facing Democrats as they aim to take credit for an economy that has shown notable vigor while deflecting unhappiness over higher prices.

On the one hand, the inflation rate has fallen back to where it was right after President Biden took office. But lower inflation readings, which typically measure the 12-month change in prices, haven't been greeted warmly by many Americans because the prices of everything from groceries and restaurant meals to housing and insurance remain much higher than they were four years ago.

The latest reading underscored that dichotomy. Inflation continues to follow a very uneven path down, making it difficult for Federal Reserve officials and economists to feel completely confident that high inflation has been stamped out.

"It's a disappointment, but inflation's descent was going to be bumpy" as it moves back toward the Fed's target, said Ryan Sweet, chief U.S. economist at Oxford Economics.

Still, he noted some idiosyncrasies like a jump in prices for sporting events and college textbooks. "The outlook for inflation really hasn't changed after this report," he said. "The labor market doesn't seem like it poses significant upside risk to inflation."

In August, core prices were firm because of a big jump in housing prices. In September, housing prices were much cooler, but prices of apparel, car insurance and airfares notched notable monthly increases. Food prices in September posted their biggest monthly gain since January, and eggs rose 8.4%.

Energy prices, however, took another step down. U.S. gasoline prices fell 4.1% from a month earlier, setting up the election to take place amid some of the cheapest income-adjusted gasoline prices in the modern era.

Thursday's report is the first of three inflation readings Fed officials will see before their next meeting, where they are expected by investors to lower interest rates by a quarter-point following a larger half-point cut last month. At last month's meeting, new projections showed most officials penciled in the equivalent of two more quarter-point cuts this year. The Fed has two more meetings this year.

Atlanta Fed President Raphael Bostic said in an interview Thursday that he has long expected month-to-month swings in economic data that can complicate the ability to spot underlying trends. He said the latest data hadn't changed his expectation that the Fed would need to make a series of cuts over the next year.

"I've been saying we should expect the data to be — what I've been using is, 'janky' — to bounce around a bit," he said. "We may get 'janky' reports from time to time, and the question will be, 'Do they signal a new trend?'"

Bostic voted in favor of last month's rate cut, and at that meeting he penciled in one more quarter-point cut this year. Bostic said Thursday he could see a plausible case for cutting rates at either or both of those meetings depending on the economic outlook, but recent uneven data says "maybe we should take a pause in November. I'm definitely open to that."

Early estimates suggest that core prices using the Fed's preferred inflation gauge, the personal-consumption-expenditures price index, will show a smaller increase in September than the CPI did. On Friday, the Labor Department will release its producer-price index for September, and economists expect this factory-gate inflation slowed slightly from August.

Investors have been rethinking how rapidly the Fed will cut interest rates because recent labor-market data has suggested the economy might be stronger than expected. While investors still think the Fed will cut interest rates at its two remaining meetings this year, they now see a slower pace of cuts and a shallower cutting cycle next year than they anticipated just a few weeks ago.

Also on Thursday, the Labor Department reported that the number of Americans who filed for initial jobless benefits rose to the highest level in more than a year last week. While that might reflect the impact of Hurricane Helene, it also adds a note of caution to other figures that show very low levels of layoffs. Stocks rose last week after a surprisingly strong jobs report on Friday.

The Social Security Administration separately said Thursday that Social Security benefits would rise 2.5% in 2025, the smallest cost-of-living adjustment in four years. The increase is calculated using a different version of the September CPI.