WASHINGTON - A closely watched measure of US consumer prices rose by more than forecast to a 40-year high in September, pressuring the Federal Reserve to raise interest rates even more aggressively to stamp out persistent inflation before it becomes entrenched.

The core consumer price index (CPI), which excludes food and energy, increased 6.6 per cent from a year ago, the highest level since 1982, Labour Department data showed Thursday.

From a month earlier, the core CPI climbed 0.6 per cent for a second month. The overall CPI increased 0.4 per cent in September, and was up 8.2 per cent from a year earlier. The median forecasts in a Bloomberg survey of economists had called for a 0.4 per cent monthly rise in the core and a 0.2 per cent gain in the overall measure.

The advance was broad-based. Shelter, food and medical care indexes were the largest of "many contributors," the report said. Prices for gasoline and used cars declined.

On the heels of a solid jobs report last week, the CPI report likely cements an additional 75-basis point interest rate hike at the Fed's November policy meeting and spurred speculation for a fifth-straight increase of that size in December. Traders also priced in a higher peak Fed rate for next year.

Stock futures fell sharply and Treasury yields surged following the report, with the 30-year rate reaching 4 per cent, the highest since 2011.

The report stresses how high inflation has broadened across the economy, eroding Americans' paychecks and forcing many to rely on savings and credit cards to keep up.

While consumer price growth is expected to moderate in the coming months, it will be a slow trek down to the Fed's goal. Policymakers have responded with the most aggressive tightening campaign since the 1980s, but so far, the labour market and consumer demand have remained resilient. The unemployment rate returned to a five-decade low in September, and businesses continue to raise pay to attract and retain the employees needed to meet household demand.

Shelter costs - which are the biggest services' component and make up about a third of the overall CPI index - rose 0.7 per cent for a second month. Both rent of shelter and owners' equivalent rent were up 6.7 per cent on an annual basis, the most on record.

Food costs rose 0.8 per cent for a second month and were 11.2 per cent higher from a year ago. The food at employee sites and schools index rose a record 44.9 per cent from the prior month, reflecting the expiration of some free school lunch programmes.

Used car prices dropped for a third month, while new car prices continued to rise at hefty clip. Airfares climbed. While gasoline prices subsided in September, they have since started climbing again. Americans also experienced higher prices for utilities like natural gas and electricity in the month.

While the Fed bases its 2 per cent target on a separate inflation measure from the Commerce Department - the personal consumption expenditures price index - the CPI is closely watched by policymakers, traders and the public.

Geopolitical developments could also keep inflation elevated. OPEC+ recently announced oil production cuts, and a potential gasoline export ban by US President Joe Biden's administration could backfire with higher pump prices. The Russia-Ukraine war continues to disrupt supplies of commodities like wheat, while the White House is also considering a ban on Russian aluminium - a key component in cars and iPhones - in response to the country's military escalation in Ukraine.

Fed officials have repeatedly emphasised in recent weeks the need to get inflation under control, even if that means higher unemployment and a recession. In minutes from their September meeting released Wednesday, many policymakers emphasised "the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action".

Central banks' determination to crush inflation, in the US and abroad, has prompted a deterioration in the economic outlook globally.

Excluding the unprecedented fall-off in 2020 due to the coronavirus pandemic, the International Monetary Fund expects economic growth to slow to the weakest level since 2009, in the wake of the global financial crisis. BLOOMBERG