Consumer Prices Rose at 3.7% Annual Rate in September

The cost of living continues to accelerate, and the consumer price index showed little relief in September, with inflation remaining well above the Federal Reserve’s goal.

The consumer price index measures the cost of goods and services across the U.S. economy, and it 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%, CNBC reported.

Stripping out volatile food and energy costs, the so-called core CPI rose 0.3% for the month and was up 2.6% on an annual basis, compared with respective estimates for 0.2% and 2.5%, CNBC reported.

Surging Energy Costs

The annual rate for headline inflation was 3.4% in August while the core rate was 2.4%, CNBC said.

The primary cause of inflation continues to be surging energy costs. The energy index rose 5.2% as tensions continued between the U.S. and Iran in a war launched in late February that shows no signs of ending soon.

Gasoline prices soared 9.1%, accounting for about half the gain in headline CPI, according to the BLS. Over the past year, gas has posted a 34.2% increase while fuel oil has jumped higher by 74.2%.

Shelter prices rose 0.4%, and used car and truck prices jumped 0.7%. Apparel prices, which are sensitive to tariffs, rose 0.3% and are up 3.4% on an annual basis. Food prices were flat on the month and up 2.5% from a year ago.

Stock market futures turned negative following the release, while bond yields were sharply higher. Futures traders also raised the odds of a rate hike when the Federal Open Market Committee next meets on Oct. 27-28 to about 54%, according to the CME Group’s FedWatch tool.

CNBC noted that this is the final CPI reading that FOMC officials will receive before that meeting. On Thursday, the BLS will release the September reading on the producer price index, a measure of wholesale costs.

Consumer Price Index Tops Benchmark Since 2021

“CPI came in hot, and it wasn’t just fuel prices, as core inflation ran at a 3.7% annualized pace in September and 3.2% over three years,” said Sonu Varghese, Chief Macro Strategist at Carson Group. “The only surprise is that investors keep getting surprised by broad-based inflation. And we’ve yet to see the full impact of higher diesel prices and the AI boom.”

CNBC reported that inflation as measured by the CPI has surpassed the central bank’s 2% benchmark since March 2021. The gauge had been trending lower at the start of 2026, but rose following the strikes the U.S. and Israel launched against Iran.

In recent days, some key policymakers have said the Fed doesn’t need to rush into another hike. However, most say they expect another increase this year.