U.S. inflation climbs to 3.7% as gasoline prices jump 9.1% in a month
U.S. consumer prices rose 0.6% in September from August. Markets ramped up bets on another Federal Reserve rate hike as early as October after the data.
Symbolic image · Photo: Rick Obst / Wikimedia Commons, CC BY 4.0 (cropped and resized)
U.S. inflation accelerated again in September. Consumer prices were up 3.7% from a year earlier, compared with 3.4% in August, the Labor Department said Wednesday. On a monthly basis prices rose 0.6%. Core inflation, which excludes food and energy, rose to 2.6% from 2.4% year over year and held at 0.3% month over month, matching August.
Gasoline was the main driver, rising 9.1% in a single month after a 3.9% gain in August, according to Axios. Airfares rose 1.2% from the prior month and 22% from a year earlier as jet fuel costs climbed. Shelter costs increased 0.4%, while food prices were flat. The Trump administration had earlier temporarily eased restrictions on tax-exempt diesel and lifted some sanctions on Russian fuel to boost diesel supply.
After the report, market-implied odds of an October rate hike rose to 44% from 22%, according to the CME FedWatch tool. The two-year Treasury yield jumped 12 basis points. Fed officials are divided: Cleveland Fed President Beth Hammack has pointed to price pressures beyond energy, including tariffs, while Governor Christopher Waller says higher Treasury yields are already restraining the economy. The data also set the 2027 Social Security cost-of-living adjustment.