Key gauge of US inflation kept painful level in Sept.

5% in the July-September quarter from a year ago. That was a healthy gain, just below a two-decade high of 5.1% reached in the AprilJune quarter.

Still, there are signs that pay growth is cooling a bit. On a quarterly basis, it rose 1.2% from the April-June quarter to the July-September period. Yet that marked a second straight quarterly slowdown after compensation growth had reached a 20-year high of 1.4% in the first three months of 2022.

Fed Chair Jerome Powell has previously mentioned the wage figures released Friday, known as the employment cost index, as among the most important measures of worker pay. Since the pandemic recession ended, the index has soared, with companies offering more generous pay and benefits to attract and keep workers.

Businesses often pass on the cost of that higher pay to their customers in the form of price increases, thereby worsening inflation. As a result, the slight slowing in pay gains may be welcomed by the Fed as a sign that inflation pressures are easing.

Though consumers spent at a solid pace last month, there were signs in Friday’s report that this trend might not last. Many Americans are tapping their savings to keep up with inflated costs for groceries, rents and utilities or are taking on more credit card debt. The saving rate fell to 3.1%, just above 3% in June, which was the lowest level in 14 years.

Americans, on average, built up their savings during the pandemic, a time when many people stayed home, postponed travel and vacations and dined out less.