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U.S. consumer inflation picked up in September as surging gasoline prices pushed the overall rate higher, with energy costs accounting for more than half of the monthly increase, according to data released by the Bureau of Labor Statistics on Wednesday.
The consumer price index (CPI) rose 0.6% from August on a seasonally adjusted basis, up from a 0.4% monthly increase in August. On an annual basis, inflation accelerated to 3.7% from 3.4%, exceeding economists’ expectations of 3.6%.
Energy prices climbed 5.2% in September, following a 2.1% increase in August, as gasoline prices surged 9.1% and accounted for more than half of the monthly rise in consumer prices.
Gasoline prices rose 34.2% over the past 12 months, pushing the annual energy index up 20.4%. Electricity prices edged up 0.2%, while natural gas prices fell 0.3%.
Core CPI, which excludes food and energy, increased 0.3% for the second consecutive month, while its annual rate accelerated to 2.6% from 2.4% in August.
Shelter costs rose 0.4%, with rent up 0.2% and owners’ equivalent rent increasing 0.3%. Airline fares climbed 1.2% in September, used car prices rose 0.7% and education costs increased 0.6%, while communication prices fell 0.2%.
Over the past year, shelter costs rose 3.2%, airline fares surged 22.4%, education prices increased 3.8% and medical care costs climbed 1.5%.
Food prices were unchanged in September as grocery prices fell 0.1% and food away from home became 0.2% more expensive.
The hotter-than-expected inflation reading has raised the prospect of another Federal Reserve rate hike this month, with traders increasing the implied probability of a 25-basis-point increase at the Oct. 27-28 meeting to around 40% from 22% before the report.
The Fed raised its benchmark interest rate by 25 basis points in September to a target range of 3.75%-4%, its first increase since July 2023, citing persistent inflation and resilient economic activity.
Minutes from that meeting, released last week, showed that most policymakers expected another rate increase before the end of the year, although officials differed over whether the move was needed to curb demand-driven inflation or guard against energy price shocks.
U.S. stock futures turned lower following the data, while Treasury yields climbed as investors reassessed the outlook for monetary policy. Gold, meanwhile, dropped more than 1% to around $4,100 per ounce.
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