US Inflation Rises to 3.7% in September on Gasoline Surge

U.S. consumer prices rose 3.7 percent in the year through September, up from 3.4 percent in August, the Bureau of Labor Statistics reported on 14 October. The monthly gain was 0.6 percent, the largest in five months.

Gasoline prices climbed 9.1 percent from August to September and accounted for more than half the monthly increase in the overall index. Over the past year gasoline is up 34.2 percent. The broader energy index rose 5.2 percent in September and 20.4 percent over the year. Core prices, which exclude food and energy, increased 0.3 percent for the month and 2.6 percent over the year, also higher than the prior month's 2.4 percent reading.

Food prices were unchanged in September. Shelter costs rose 0.4 percent for the month and 3.2 percent annually. Airline fares increased 1.2 percent monthly and 22 percent over the year. The Labor Department noted that the acceleration follows months of elevated energy prices linked to the conflict involving Iran that began in late February.

Economists surveyed ahead of the release had expected a 3.6 percent annual headline rate and a 2.5 percent core rate. The actual figures exceeded both. Moody's chief economist Mark Zandi said the report shows inflation is uncomfortably strong and that the war's effects are visible across energy-related categories.

The data arrives weeks before the 3 November midterm elections. Affordability has been a central campaign issue. Higher pump prices are among the most visible costs for households. The Federal Reserve, which targets 2 percent inflation, faces a reading that remains well above that mark even after excluding volatile energy.

Average national gasoline prices stood near $4.33 per gallon on the day of the release, according to AAA, up roughly 45 percent from late February levels before the Iran-related conflict intensified. Fuel oil prices rose 15.3 percent in September alone. Electricity increased 0.2 percent monthly.

The September figures mark the third consecutive month of headline inflation above 3 percent after earlier readings had moderated. Core inflation has also edged higher rather than continuing its prior decline. The combination of a sharp monthly energy spike and a firmer core reading leaves less room for the Fed to ease policy in the near term if the trend persists.

Households continue to face higher costs for transportation and shelter. The Labor Department will release October data on 10 November, after the election. Until then, the September report supplies the last major official inflation reading voters will see before casting ballots.