Personal spending appears to have stalled in September, another economic warning sign for the Fed to consider as it weighs whether to cut interest rates.

Federal Reserve Chairman Jerome Powell at Capitol Hill on June 25.Kent Nishimura / Getty Images file

The Federal Reserve`s preferred measure of inflation, released Friday, showed that it had risen 2.8% in September from a year ago.

The personal consumption expenditures, or PCE, index measures consumer spending on goods and services. It accounts for about two-thirds of nationwide spending and is a significant part of national economic output.

From the month before, core inflation, which strips out volatile food and energy categories, was up 0.3% in September, slightly less than had been expected. Analysts surveyed by Dow Jones had expected 2.9%.

However, in yet another economic warning sign for the Federal Reserve, personal spending was flat September. Although, excluding food and energy, spending rose 0.2% from August.

"The unchanged reading for real consumption in September was accompanied by a downward revision to real spending in August, from 0.4% to 0.2%," analysts at Capital Economics wrote.

"And with the slump in motor vehicle sales in October likely to have weighed on spending that month, both consumption and GDP are set to slow in the fourth quarter," they added.

Despite data showing an apparent slowdown in consumer spending, more recent data after Black Friday showed that consumers still spent billions.

Friday`s release will be the final major piece of economic data that the Federal Reserve receives before holding its next interest rate meeting Dec. 9-10.

The central bank is expected to lower interest rates again, but Fed policymakers have been divided in recent weeks over whether the state of inflation or the labor market is a more pressing concern.

Inflation has risen every month since April and currently sits at 3%. But due to the recent government shutdown, fresher data will not be published until Dec. 18, after their meeting.

Additionally, newer PCE data for the months of October and November have not yet been given a release date.

The Fed will get the next official jobs report on Dec. 16, too late for its rate-setting meeting next week.

Earlier in the week, a jobs report from payroll processing company ADP showed a net loss of 32,000 jobs in November, with small businesses bearing the brunt of the pain. That report does not include local, state or federal government employment, though.

Announced layoffs in November also rose to their highest level since the Covid-19 pandemic, separate data from Challenger, Gray & Christmas showed Thursday.