US September CPI inflation rises to 3.7%, above estimates; core inflation at 2.6%

US consumer inflation accelerated in September, with headline inflation rising to 3.7% year-on-year from 3.4% in August, as surging energy costs pushed prices higher.

The Consumer Price Index (CPI) rose 0.6% month-on-month, according to data released by the US Bureau of Labor Statistics on Wednesday. The annual inflation rate came in above the 3.6% forecast.

Core CPI, which excludes volatile food and energy prices, increased 2.6% year-on-year, compared with estimates of 2.5%. On a monthly basis, core inflation rose 0.3%, exceeding expectations of 0.2%.

Energy prices were the primary driver of the increase in headline inflation. The energy index rose 5.2% during the month, while gasoline prices surged 9.1%, accounting for about half of the monthly increase in the overall CPI.

Over the past year, gasoline prices have climbed 34.2%, while fuel oil prices have risen 74.2%.

Food prices remained unchanged in September and were up 2.5% from a year earlier. Shelter prices increased 0.4% during the month, while used car and truck prices rose 0.7%. Apparel prices, which are sensitive to tariffs, increased 0.3% month-on-month and 3.4% year-on-year.

The inflation data comes amid continued tensions between the US and Iran, with higher energy costs adding to price pressures ahead of the November 3 midterm elections.

The stronger-than-expected annual inflation readings prompted a reassessment of the US Federal Reserve's interest rate outlook ahead of its October 27-28 meeting, as per CNBC.

According to the CME Group's FedWatch tool, traders raised the probability of an interest rate hike at the October meeting to about 54%, CNBC reported.

The September CPI report is the final consumer inflation reading available to Federal Open Market Committee officials before their next meeting. The Bureau of Labor Statistics is scheduled to release September producer price index data on Thursday, offering another reading on price pressures across the US economy.

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