Consumer Prices Rose 3.7% in the Year to September as Gasoline Climbed 9.1%

Gasoline accounted for about half of September's jump in consumer prices, CNBC reported, as the Bureau of Labor Statistics said the annual inflation rate reached 3.7%. The agency released the consumer price index (CPI) on Wednesday, Oct. 14.

The index rose a seasonally adjusted 0.6% from August, which adjusts for regular calendar swings in prices. The annual rate was 3.4% in August. Economists surveyed by Dow Jones had forecast a 0.6% monthly gain and a 3.6% annual rate.

Fuel Costs Lead the Increase

The energy index rose 5.2% in September, CNBC reported, as tensions continued between the U.S. and Iran in a war that began in late February. Gasoline alone rose 9.1% for the month and is up 34.2% from a year earlier. Fuel oil is up 74.2% over the same 12 months.

Food prices were flat in September and 2.5% higher than a year ago. Shelter costs rose 0.4% on the month, and used cars and trucks rose 0.7%. Apparel, which is sensitive to tariffs, rose 0.3% and is up 3.4% over the year.

Core Inflation Also Beat Forecasts

Core CPI strips out food and energy, which tend to swing the most. It rose 0.3% in September and 2.6% from a year earlier, against forecasts of 0.2% and 2.5%. In August the annual core rate was 2.4%.

Sonu Varghese, chief macro strategist at Carson Group, said the report was not only about fuel. He said core inflation ran at a 3.7% annualized pace in September (the single month's pace extended across a year) and 3.2% over three years.

Varghese also said the full effect of higher diesel prices and the AI boom has yet to show up.

Rate Hike Odds Rise Before the Fed Meets

Stock futures turned negative after the release, and bond yields rose sharply. Futures traders raised the odds of an interest rate increase at the Federal Open Market Committee meeting on Oct. 27-28 to about 54%, based on the CME Group's FedWatch tool.

The committee is the Federal Reserve's rate-setting panel.

The odds of a hike before the end of 2026 rose above 96%. Traders see a near 50-50 chance of a half-point increase by December. This was the last CPI report officials will see before their October meeting.

Prices Weigh on Voters and Households

CBS News noted that economists, according to FactSet, also expected a 3.6% annual rate. It said the data arrives weeks before the midterm elections.

A CBS News poll released earlier this month found that nine in 10 Americans say prices are the most important factor shaping their view of the economy.

Households comparing price gains with their paychecks can read about hourly pay trends in another recent report.

The BLS is due to release the September producer price index, a measure of wholesale costs, on Thursday.