The core personal consumption expenditures price index, which strips out the volatile food and energy components, rose 0.3% in September, according to the Bureau of Economic Analysis report out Friday. Inflation-adjusted consumer spending jumped 0.4% last month.Resilient household demand paired with a pickup in inflation underscores momentum heading into the fourth quarter. While economists generally expect consumer spending to slow in the coming months, Fed officials have warned that strong data could lead them to keep tightening.

The data "suggest that the Fed needs to remain on guard for somewhat higher core inflation prints before year-end," Omair Sharif, the president of Inflation Insights LLC, said in a note to clients. "Indeed, it seems like there are some upside risks heading into Q4."

That said, policymakers are widely expected to leave the benchmark interest rate unchanged at their meeting next week. A rapid surge in borrowing costs — 10-year Treasury yields surpassed 5% for the first time in 16 years earlier this week — has contributed to the Fed's cautiousness.

Stock futures remained higher, Treasury yields rose and the dollar weakened after the report.One key area of concern for officials is service-sector prices, which rose by 0.5%, the most since January. Excluding housing and energy, services inflation accelerated to 0.4%, from 0.1% in the prior month.

Spending was driven by both goods and services, including on cars, prescription drugs and international travel.

The most important support for household spending is the strength of the labor market, which at the moment remains healthy. But other factors, like a record surge in household wealth coming into this year and lingering pandemic-era savings, have played a part as well.While wages and salaries rose 0.4%, real disposable income fell for a third straight month. As a result, consumers have been saving less to support their spending.