Consumer Price Growth Accelerates as Core Inflation Picks Up
In September, consumer prices increased 0.6% from August and 3.7% over the year, up from the 3.4% annual rise in August and higher than expectations. Core CPI, which excludes more volatile energy and food prices, rose 0.3% from August and 2.6% over the year, up from the 2.4% 12-month increase the month prior.
Energy costs climbed 5.2% over the month in September, after advancing 2.1% in August. Over the year, energy costs surged 20.4%, after increasing 16.0% year-over-year in August. Within the energy index, gasoline prices jumped 9.1% in September and 34.2% over the year, while fuel oil prices soared 15.3% month-over-month and 74.2% year-over-year. Meanwhile, electricity prices edged up 0.2% in September and 4.4% from September 2025, while natural gas prices declined 0.3% over the month but were still up 5.0% over the year.
In September, food prices stayed the same over the month but increased 2.5% over the year, down slightly from the 2.6% annual increase in August. Prices for food at home ticked down 0.1% from August but rose 1.8% from September 2025, while prices for food away from home moved up 0.2% month-over-month and 3.5% year-over-year. Of the different food groups, coffee and fish and seafood rose at the fastest pace, climbing 7.1% and 6.9% over the year, respectively.
The shelter index advanced 0.4% from August and 3.2% over the year, up slightly from the 3.0% annual gain in August. Meanwhile, prices for used cars and trucks increased 0.7% over the month but declined 1.5% over the year, while new vehicle prices ticked up 0.2% over the month and 0.6% from September 2025. Prices for motor vehicle maintenance and repair also jumped 0.7% month-over-month and 5.8% year-over-year.
The headline inflation rate is still well above the Federal Reserve’s 2.0% target, driven in part by rising energy prices stemming from the war in the Middle East. Core inflation also remains elevated, though well below the headline rate. Federal Reserve officials raised their interest rate target at their September meeting, but markets anticipate that the Federal Open Market Committee will hold rates steady at its meeting later month, even as risks to its inflation mandate persist.
