Inflation moderated in September as energy price increases eased from the previous month and used car prices continued to decline, according to the latest data from the Bureau of Labor Statistics released Thursday morning.

The Consumer Price Index (CPI) showed inflation rose 0.4% over last month and 3.7% over the prior year on a headline basis in September, a deceleration from August's 0.6% month-over-month increase and in line with August's 3.7% annual rise.

Both measures were slightly higher than economist forecasts for a 0.3% month-over-month increase and a 3.6% annual increase, according to data from Bloomberg.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in September climbed 4.1% over last year — a slowdown from the 4.3% annual increase seen in August. Monthly core prices rose 0.3%, on par with August. Both measures met economist expectations.

US stocks were mostly muted in early trading following the release of the data. Treasury yields inched up less than 2 basis points to trade around 4.6%.

Inflation has remained significantly above the Federal Reserve's 2% target. A labor market that, while softening in certain areas, is still tight, coupled with an upside surprise in wholesale inflation data, suggests the Federal Reserve could continue to raise interest rates. The Federal Reserve’s latest meeting minutes, released Wednesday, showed policymakers support a more restrictive rate environment.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

But economists don't see Thursday's report necessarily offering support for another rate increase from the central bank.

"Overall, there is nothing here that will convince Fed officials to hike rates at the next FOMC meeting," economists at Capital Economics wrote in a note on Thursday. "We continue to expect a more rapid decline in inflation and weaker economic growth to result in rates being cut much more aggressively next year than markets are pricing in."

Seema Shah, chief global strategist at Principal Asset Management, called this report, "reassuringly uneventful."

"With core CPI in line with expectations and extending the disinflation narrative, there is nothing in the inflation report that should sway the Fed in one direction or the other," Shah added.

Following the release of the data, markets were pricing in a roughly 90% chance that the Federal Reserve keeps rates unchanged next month, according to data from the CME Group.

Other notable call-outs from the inflation print include the energy index, which decreased 0.5% for the 12 months ending in September. Still, energy prices increased 1.5% on a seasonally adjusted month-over-month basis after rising 5.6% in August. Gas prices rose 2.1% in September following a 10.6% increase in August.

Within core inflation, rent increases remained elevated but continued to show signs of easing on an annual basis.

The shelter index was the largest factor in the monthly increase in core inflation, increasing 0.6% month over month — higher than August's 0.4% monthly jump. The index rose 7.2% over the last year, down slightly from August's 7.3% annual gain.

The indexes for rent and owners' equivalent rent rose 0.5% and 0.6% on a monthly basis, respectively. Owners' equivalent rent is the hypothetical rent a homeowner would pay for the same home.

Other indices that rose in August included lodging away from home, motor vehicle insurance, recreation, personal care, and new vehicles, BLS noted.

The indexes for used cars and trucks and for apparel were among those that decreased over the month. The monthly prices for used cars and trucks dropped another 2.5% in September after prices fell 1.2% in August.

The food index increased 3.7% in September over the last year, with food prices rising 0.4% from August to September. The index for food at home increased just 0.1% over the month after rising 0.2% in August.

Bucking previous months' reports, egg prices increased 0.9% month over month after falling 2.5% in August and 2.2% in July.

Read more: How to find out your 2024 Social Security COLA increase

Read more inflation coverage:

• Stock open flat as CPI inflation holds steady: Stock market news today

• Gas price increases eased, but still 'major contributor' to September inflation print

• Housing costs again frustrate the Fed’s efforts to curb inflation

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected].

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