A key U.S. inflation measure closely watched by the Federal Reserve in September posted its biggest year-on-year increase in more than 30 years, the Commerce Department reported Friday.

The personal consumption expenditure (PCE) price index, the Fed's preferred inflation measure, jumped 4.4 percent in September from a year ago, the largest 12-month increase since January 1991, according to the department.

In the 12 months through September, the so-called core PCE price index that strips out volatile food and energy prices, rose 3.6 percent for a fourth straight month, remaining at the highest level since May 1991.

Meanwhile, a separate report from the Labor Department on Friday showed that the employment cost index, the broadest measure of labor costs, surged 1.3 percent in the third quarter, the largest gain since the first quarter of 2001.

"While we expect wage growth to slow over the second half of 2022, as more workers return to the jobs market, the near-term pressure on labor costs will keep inflation elevated over the next few quarters and make it difficult to settle back to the Fed's 2% target anytime soon," Sarah House, senior economist at Wells Fargo Securities, said Friday in a note.

"As a result, our expectation is that inflation will continue to be well above its historic 2 percent value, with forecasters and bond markets increasingly marking up their forecasts for inflation," echoed Jason Furman, former chairman of the White House Council of Economic Advisers and senior fellow at the Peterson Institute for International Economics.

U.S. Treasury Secretary Janet Yellen recently said that she expected U.S. inflation rates to remain high through the first half of next year before easing.

"On a 12-month basis, the inflation rate will remain high into next year because of what's already happened," Yellen said, adding inflation is expected to fall to acceptable levels in the second half of next year as supply bottlenecks gradually improve.

"The COVID crisis markedly diminished spending on services and caused a reallocation of spending toward goods. And the supply of goods to Americans has increased substantially, but there's still pressure there," she said.