September brought little relief to the accelerating cost of living, as consumer prices increased again and kept the inflation rate well above the Federal Reserve’s goal.
The consumer price index, a broad measure of goods and services costs across the U.S. economy, rose a seasonally adjusted 0.6% for the month, putting the 12-month rate at 3.7%, the Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones expected respective gains of 0.6% and 3.6%.
Stripping out volatile food and energy costs, so-called core CPI rose 0.3% for the month and was up 2.6% on an annual basis, compared to respective estimates for 0.2% and 2.5%.
Analyst Chris Anstey said recent Fed communications have not laid the groundwork for a consecutive October rate hike. Today's stronger-than-expected US core CPI reading may not change that, but will reinforce expectations of further Fed tightening. The September rate increase was almost certainly not a "one-off".
The print sent US Treasury yields higher, pushed gold and silver sharply lower and strengthened the dollar, and led markets to price in three additional Fed rate hikes through end-2027.
This is the first uptick in US inflation since May, underscoring persistent energy-price spillovers from the Middle East. Gasoline and diesel surged after the outbreak, eased over the summer, then rallied again as tensions escalated, with diesel reaching record highs. Trump has sought measures to blunt the consumer impact of higher energy costs; polls indicate voter dissatisfaction could tilt midterm support toward Republicans.
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