Inflation increased modestly in October after hitting a seven-month low in September, a sign the Federal Reserve still has work to do to get lingering price pressures worked out of the economy as the central bank tries to lower its benchmark interest rates to keep the job market on track.

The Labor Department reported Wednesday that prices increased by 2.6% last month compared to the year prior, an increase from the 2.4% observed in September. On a month-to-month basis, prices increased by 0.2% for the second consecutive month. The uptick in prices was driven by increases to rents, used cars and airline tickets.

“Core” prices, which exclude volatile food and energy categories, increased by 3.3% compared to last year. Core prices have increased by 0.3% for three consecutive months, tracking above the Fed’s target of 2% over the long run.

While inflation has cooled considerably from the high of 9.1% in 2022, it is still above the Fed’s target and has put a considerable squeeze on consumers’ wallets as prices are 20% higher than they were three years ago. It has been on a mostly steady track downward since the central bank raised its benchmark interest rate but has been difficult to get back to pre-pandemic levels.

High prices were a key issue for many voters in the presidential election, as frustration over inflation and the state of the economy were a driving force for President-elect Donald Trump’s victory over Vice President Kamala Harris. The economy is strong based on historical averages with steady growth, low unemployment and moderating price pressures, yet irritation over inflation has driven Americans to hold a sour outlook on the economy.

Most economists have predicted inflation would take a long and bumpy road back to the 2% target, including some upticks along the way, but a prolonged trend of increases or stalling out of progress could ramp up concerns about the Fed being able to continue cutting rates. The central bank cut its benchmark interest rate for a second time last week with a quarter-point reduction but is facing an uncertain path forward with a new administration coming into office early next year.

“Near-term CPI bumpiness doesn’t detract from the fact that fundamentals remain disinflationary,” said EY chief economist Gregory Daco. “That narrative will remain in place into early 2025, but it could then change as deregulation could support upside risks to growth and inflation, and immigration restrictions could lead to renewed labor market tightness and wage pressures. Going into 2026, tariffs and tax cuts could engender further inflationary pressure.”

Trump’s economic plans include trillions in tariffs and tax cuts that some economists are concerned could increase prices, at least in the short term. For the Fed, which has made data dependence a focal point of its inflation-fighting strategy, what the future holds is uncertain as it waits to see which policy proposals from the campaign trail become reality as Trump and Republican majorities take office.

Fed Chair Jerome Powell said that the central bank is still confident that inflation is still heading downward and that the election is not impacting policy decisions at this point.

“We don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy would be, specifically, whether and to what extent those policies would matter for the achievement of our goal variables, maximum employment and price stability. We don’t guess, we don’t speculate, and we don’t assume,” he said.

Economists are expecting the Fed to remain cautious in lowering interest rates, especially if inflation shows signs of being sticky this year combined with the uncertainty of an incoming administration. The next consumer price index is scheduled to be released on Dec. 11, a week before the Fed’s next meeting that could bring another reduction to its benchmark interest rate.