US Inflation Climbs to 3.7% as Gasoline Prices Jump 9.1%

Keypoints:

• The Consumer Price Index rose 0.6% in September and 3.7% from a year earlier
• Gasoline rose 9.1% in the month and accounted for more than half of the monthly increase
• Core prices, which exclude food and energy, rose 0.3% on the month and 2.6% on the year
• Shelter prices rose 0.4% in September, bringing the yearly gain to 3.2%
• Egg prices fell 20.6% from a year ago as supply recovered from avian flu

The Bureau of Labor Statistics (BLS) released the September Consumer Price Index (CPI) on 14 October. Overall prices rose 0.6% from August, after a 0.4% gain the month before. The annual rate reached 3.7%, up from 3.4% in both July and August. Economists had expected 3.6%.

Gasoline did most of the work. Prices at the pump rose 9.1% in September after a 3.9% rise in August. They are now up 34.2% from a year ago. The BLS said gasoline accounted for more than half of the monthly increase, up from about a third in August. Disruptions to global energy supplies keep pushing fuel costs higher.

Underlying inflation firmed too. Core CPI rose 0.3% on the month, and the yearly rate moved up to 2.6% from 2.4%. Shelter, one of the largest components, gained 0.4% after a 0.3% rise in August. Rents rose 0.2%, while hotel and motel prices jumped 2.0%.

The grocery aisle offered relief. Food prices were flat on the month and are up 2.5% from last year. Food at home fell 0.1%. Eating out rose 0.2% and is up 3.5% from a year earlier. Beef prices fell 1.0% in September but remain 3.5% above last year. Eggs dropped 1.3% on the month as supply normalized after an avian flu outbreak.

Only three major categories declined in September. They were groceries, medical care commodities and utility gas service. Energy inflation now stands at 20.4% year over year, which shows how concentrated the pressure is.

Banks and investors are watching closely, since sustained inflation tends to keep interest rates higher for longer. Headline inflation can swing on a single price, such as fuel. Core inflation shows how much pressure is spreading beyond it.