U.S. inflation accelerated in September to 2.8% on an annual basis, further above the Federal Reserve's 2% target, according to data released Friday.

The personal consumption expenditures (PCE) price index, the Fed's preferred data point for measuring inflation, rose from 2.7% in August.

The report, delayed due to the government shutdown, is the last major inflation reading before the Fed's rate decision next week.

When food and energy prices were excluded, prices also rose by 2.8% in September. However, that was below the 2.9% reading in August for the same benchmark.

The data did not significantly move the U.S. stock market early Friday. Stocks are up modestly for the week, due partly to expectations the Fed will cut interest rates next week.

"The market is looking at this data and saying it's a little softer than had been anticipated," says Sam Stovall of CFRA Research. "It supports the renewed optimism toward a Fed cut."

The Fed has cut interest rates the last two meetings following indications of a slowdown in the U.S. employment market.

But the Fed has also kept an eye on inflation due to the risk that President Donald Trump's tariffs could reignite a major increase in prices.

Friday's data—which, though delayed, represents one of the only major recent data inputs—will likely keep inflation on the radar but won't challenge the Fed's current focus on jobs.

Futures markets continued to bet on next week's Fed rate cut following the PCE data release.

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