Consumer prices in the United States rose 0.6% in September on a seasonally adjusted basis, with the annual rate reaching 3.7%, the Bureau of Labor Statistics reported Wednesday. The monthly increase matched expectations, but the yearly figure came in higher than economists surveyed by Dow Jones had forecast at 3.6%.
Energy costs were the main driver of the increase. The energy index surged 5.2% for the month as tensions between the U.S. and Iran continued following a war that began in late February. Gasoline prices jumped 9.1% and accounted for roughly half the gain in headline inflation. Over the past year, gas prices have climbed 34.2% while fuel oil has risen 74.2%. Food prices remained flat for the month but were up 2.5% annually, while shelter costs increased 0.4%.
For borrowers and savers, the data signals the Federal Reserve is likely to continue tightening monetary policy. The central bank approved its first rate hike in over three years in September, raising the benchmark funds rate to a target range of 3.75%-4%. Markets expect the Fed to skip an October increase but to hike again in December, with multiple increases potentially coming in 2027.
Inflation has remained well above the Fed's 2% target since March 2021. While policymakers often look through temporary supply shocks like the energy surge, officials worry that a prolonged war could embed price increases more broadly throughout the economy.