Inflation surged in September as U.S. energy costs jumped

Energy costs drove inflation higher than expected in September, with gasoline prices rising 9.1% from the prior month and accounting for over half the monthly increase.

Inflation rose at an annual rate of 3.7% in September, exceeding economist expectations of 3.6%, according to the Consumer Price Index released by the Labor Department. The acceleration follows two months of steady inflation at 3.4% annually.

Gasoline prices surged 9.1% from August to September and represented more than half of the monthly CPI increase. Energy prices overall jumped 20.4% from a year earlier, while gasoline climbed 34.2%. The national average for a gallon of gasoline reached $4.33 on Wednesday, up from $2.98 before recent geopolitical conflicts.

Core CPI, excluding energy and gas, rose 2.6% annually, accelerating from 2.4% in August and exceeding forecasts of 2.5%. Analysts note price pressures are broadening beyond energy into categories like airline fares, shelter, and used cars. Economists suggest the stronger-than-expected report may prompt the Federal Reserve to raise interest rates at its October meeting, with market probability shifting to 50% from 20%.