U.S. consumer prices jump 0.6% in September as gasoline drives inflation back to 3.7%

Consumer prices rose at a faster clip in September as a sharp jump in gasoline costs pushed the annual inflation rate to 3.7%, the U.S. Bureau of Labor Statistics reported Wednesday, leaving the Federal Reserve with another hot fuel-driven print ahead of its late-October meeting.

What the Labor Department reported

The Consumer Price Index for All Urban Consumers rose 0.6 percent on a seasonally adjusted basis in September after a 0.4 percent increase in August, the Bureau of Labor Statistics said in release USDL-26-1574. Over the 12 months ending in September, the all-items index increased 3.7 percent before seasonal adjustment, up from a 3.4 percent rise over the 12 months ending in August.

Gasoline did most of the monthly work. The gasoline index rose 9.1 percent in September and accounted for over half of the monthly all-items increase, the bureau said. The broader energy index climbed 5.2 percent after a 2.1 percent gain in August. Before seasonal adjustment, gasoline prices rose 6.5 percent in September.

The same Table A that prints the headline also shows how uneven the path has been this year: all items rose 0.9 percent in March, fell 0.4 percent in June, and barely moved in July before the August and September reacceleration. That sequence matters for readers who saw the summer soft patches and are now looking at a hotter fall print driven by fuel.

Core prices and shelter

The index for all items less food and energy — the so-called core measure Fed officials often watch — rose 0.3 percent in September, matching August's increase. Over the year, core prices were up 2.6 percent, following a 2.4 percent rise over the 12 months ending in August.

Shelter rose 0.4 percent in September after a 0.3 percent increase in August. Owners' equivalent rent increased 0.3 percent and rent of primary residence rose 0.2 percent. Lodging away from home jumped 2 percent after a 2.4 percent rise the prior month. Over the past 12 months, shelter was up 3.2 percent.

Other core categories that rose on the month included recreation (0.5 percent), used cars and trucks (0.7 percent), education (0.6 percent), airline fares (1.2 percent), apparel (0.3 percent), new vehicles (0.2 percent) and medical care (0.1 percent). Inside medical care, hospital services rose 0.7 percent while prescription drugs fell 1.2 percent. Communication was among the indexes that declined, down 0.2 percent after a 2.3 percent jump in August.

Services less energy services rose 0.4 percent on the month and 3.1 percent over the year. Commodities less food and energy commodities rose 0.3 percent on the month and 0.7 percent over the year — a reminder that goods inflation remains quieter than services even as used cars and apparel moved higher in September.

Food flat, energy still the year-over-year story

The food index was unchanged in September after rising 0.1 percent in each of the prior two months. Food at home fell 0.1 percent. Three of the six major grocery groups declined: meats, poultry, fish and eggs dropped 0.5 percent, with beef down 1 percent; dairy and related products fell 0.9 percent, with milk down 2 percent; and other food at home eased 0.2 percent. Offsetting those declines, nonalcoholic beverages rose 0.9 percent, fruits and vegetables rose 0.5 percent, and cereals and bakery products edged up 0.1 percent.

Food away from home rose 0.2 percent, with full-service meals up 0.3 percent. Over the last year, food was up 2.5 percent, with food at home up 1.8 percent and food away from home up 3.5 percent.

Energy remains the standout on a year-over-year basis. The energy index increased 20.4 percent for the 12 months ending September, driven in large part by gasoline, which was up 34.2 percent over the same period. Energy commodities rose 35.3 percent over the year. Fuel oil rose 74.2 percent over 12 months and 15.3 percent on the month. Electricity was up 4.4 percent over the year and 0.2 percent on the month; utility natural gas rose 5 percent over the year but fell 0.3 percent in September.

Why the print lands now

Wednesday's release is the main consumer-inflation reading before the Federal Reserve's next scheduled policy meeting, listed on the Fed's public calendar for late October. The bureau's category detail shows a familiar split for this cycle: a headline that can still be yanked around by gasoline, a core rate that is no longer near the Fed's longer-run 2 percent goal on a year-over-year basis, and grocery prices that paused even as restaurant tabs kept rising.

For households, the gasoline line is the one that shows up at the pump first. For markets and policymakers, the core and shelter lines are the ones that decide whether the September acceleration looks like a fuel shock or a broader reopening of price pressure. The bureau's own words put more than half of the monthly all-items increase on gasoline, which is an unusually concentrated contribution for a single index.