United States: Inflation Accelerated Again in September

As expected, consumer prices picked up again in September, driven by another increase in energy costs, which accounted for half of the overall gain. Energy prices rose 5.2%, their largest increase since March, supported by gains of 9.1% for gasoline and 15.3% for fuel oil. Fortunately, the modest increase in energy services prices (+0.1%) helped limit the sector’s overall contribution.

Gasoline prices have eased since the end of September, with prices at the pump down nearly 5%. If these recent developments hold—or, better yet, continue—energy prices could subtract from monthly total CPI growth in October.

Developments in food prices are encouraging. Concerns that higher fuel costs, particularly diesel prices, which reached a record high in September, would spill over into food prices were not borne out that month. Food prices were unchanged for the first time since March, while grocery prices edged down, notably for beef and pork.

Excluding food and energy, the core CPI’s 0.3% monthly increase was slightly stronger than expected. Goods prices showed a noticeable acceleration, with their 0.3% monthly gain the largest since January 2025. Used vehicle prices recorded a particularly significant increase, even though other indicators had pointed to some easing. Price pressures also persisted for computer equipment, which rose 1.4% during the month—following increases of 3.5% in July and 3.8% in August—and 9.7% year over year. Prices for services excluding energy also grew somewhat faster than in previous months. Further notable increases were recorded for lodging at hotels and motels, transportation services and medical care. Looking at core services excluding shelter, the three-month annualized change climbed from 2.0% in August to 4.6% in September, its highest level since March. 

Inflation remains under pressure in the United States. Energy price movements are a major source of the renewed acceleration, but there are also concerns elsewhere. Relative to consensus expectations, the strength of core inflation was more surprising than that of total inflation in September. Energy’s contribution is fortunately expected to decline beginning in October, but where are core prices headed? The answer is particularly important for Federal Reserve officials, who are likely weighing whether to continue the monetary tightening cycle that began in September.