U.S. consumer prices rise by 3.7% year-on-year in September

Investing.com - Headline and underlying U.S. consumer price growth accelerated by more than anticipated on an annualized basis in September, underlining the impact of an energy shock linked to the Iran war that could factor into Federal Reserve interest-rate decisions over the rest of the year.

Overall, consumer prices rose 3.7% in the twelve months to September, up from 3.4% in August and faster than expectations of 3.6%. Month-on-month, the closely-watched inflation gauge increased 0.6%, compared to 0.4% previously and in line with forecasts.

Gulf supply constraints due to an expanding conflict in the Middle East have drove up energy prices last month, despite reports that supplies out of the region were improving.

The energy portion of the Labor Department’s consumer price index gained 5.2% in September following a 2.1% increase in August. Gasoline prices, in turn, jumped by 9.1%, accounting for over half of the monthly rise in all items, the Labor Department said.

Stripping out volatile items like food and fuel, the so-called "core" measure increased 0.3% on a monthly basis and 2.6% year-on-year. Economists had seen the figures at 0.2% and 2.5%, respectively. The cost of used cars and trucks, airline fares, medical care and apparel all contributed to the rise in the core reading.

Analysts have flagged worries that a recent spike in diesel prices could bleed into transportation expenses, pushing up prices for a host of consumer goods in the process.

Wednesday’s numbers are likely to be closely monitored by Fed officials, especially with the central bank’s October 27-28 gathering coming before the release of the personal consumption expenditures price index, one of policymakers’ preferred inflation metrics.

Last month, the Fed hiked rates by a quarter of a percentage point, citing a desire to cool inflation back down to its 2% target level. It was the central bank’s first rate increase since 2023.

(This is a developing story. Please check back later for updates.)

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