Core CPI climbs 0.3% month-on-month, failing to show the expected deceleration.
Gasoline prices surge 9.1%, accounting for more than half of the total monthly inflation increase.
U.S. consumer inflation for September came in higher than market expectations. While a sharp jump in gasoline prices was the primary driver of headline inflation, core CPI—which excludes volatile food and energy components—also recorded a stronger-than-anticipated gain.
The U.S. Bureau of Labor Statistics (BLS) announced on the 14th (local time) that the Consumer Price Index (CPI) rose 3.7% compared to the same month last year. This marked an increase from the 3.4% recorded in August and exceeded the 3.6% consensus estimate compiled by Trading Economics by 0.1 percentage point. On a seasonally adjusted monthly basis, the CPI rose 0.6%, outpacing the 0.4% increase seen in August but remaining in line with market forecasts.
Gasoline was the primary catalyst for the overall rise in prices. A 9.1% month-on-month increase in gasoline costs accounted for more than half of the total monthly increase in the CPI. Energy prices as a whole rose by 5.2%, accelerating from the 2.1% growth observed in August.
The core CPI also failed to exhibit the anticipated slowdown. It rose 2.6% year-on-year, surpassing both August's 2.4% figure and the market estimate of 2.5%. On a monthly basis, core inflation increased by 0.3%, matching the August reading but exceeding the 0.2% growth expected by the market.
Shelter costs, a major component of core inflation, rose 0.4% month-on-month, accelerating from the 0.3% increase in August. Meanwhile, used car prices climbed 0.7%, and airfares rose by 1.2%.
Conversely, food prices remained largely unchanged. While dining-out costs rose by 0.2%, the cost of groceries for home consumption fell by 0.1%, leaving overall food prices flat.
These results provide the Federal Reserve with grounds to maintain its vigilant stance on inflation. During last month's Federal Open Market Committee (FOMC) meeting, the Fed raised its target policy rate range by 0.25 percentage points to 3.75–4.00%.
However, the limited pace of job growth remains a factor that necessitates caution regarding further tightening. According to the BLS, non-farm payrolls increased by 29,000 in September, and the unemployment rate stood at 4.2%. This suggests that the central bank must balance the pressure of persistent inflation with current labor market conditions.
Moving forward, the durability of the energy price surge and the trajectory of core inflation will be critical. While a stabilization in gasoline prices could ease overall inflationary pressure, continued gains in core categories, such as shelter, could suggest that price stability will take longer to achieve. The Federal Reserve is scheduled to hold its next FOMC meeting on the 27th–28th (local time), with the October CPI data set to be released on November 10th.
