US consumer prices accelerate in September on costlier petrol; core CPI firmer

[WASHINGTON] US consumer prices accelerated in September amid a surge in petrol costs, dealing another blow to President Donald Trump and his Republican Party ahead of the Nov 3 midterm elections and putting an interest rate increase later this month back on the radar.

The Consumer Price Index rose 0.6 per cent last month after climbing 0.4 per cent in August, the Labor Department’s Bureau of Labor Statistics said on Wednesday. In the 12 months through September, the CPI advanced 3.7 per cent after rising 3.4 per cent in August.

Economists polled by Reuters had forecast the CPI would gain 0.6 per cent over the month and increase 3.6 per cent on a year-over-year basis. Petrol prices soared 7.1 per cent in September, data from the US Energy Information Administration showed.

The report followed surveys this month showing a further deterioration in consumer sentiment and a plunge in Trump’s approval rating, driven by angst over the rising cost of living.

A Reuters/Ipsos poll showed about 78 per cent of Americans blamed Trump’s policies, including tariffs on imports and the US-Israeli war with Iran, for rising prices, which are outpacing wages.

Underlying inflation picks up

Excluding the volatile food and energy components, the CPI gained 0.3 per cent in September, matching the gain in August. In the 12 months through September, core CPI inflation increased 2.6 per cent after advancing 2.4 per cent in August.

The US central bank tracks the Personal Consumption Expenditures Price Index for its 2 per cent inflation target. The core CPI measure is lagging core PCE inflation, which increased 3 per cent in August, because of the different weights assigned to the components in the baskets.

The Fed last month raised its overnight benchmark interest rate by 25 basis points to the 3.75 to 4 per cent range, the first hike in three years, and flagged further increases in borrowing costs in the months ahead.

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Prior to the CPI report, financial markets assigned a roughly 22 per cent chance of a rate hike at the Oct 27-28 policy meeting, CME Group’s FedWatch Tool showed.

The odds of a rate increase this month diminished following underwhelming payroll gains in September as well as cooler-than-expected PCE inflation readings for July and August. Economists had expected the Fed to raise rates in December.

The September CPI inflation report was keenly awaited by millions of retirees and other Social Security recipients trying to figure out how much their benefits will increase next year.

The Social Security Administration uses the CPI for Urban Wage Earners and Clerical Workers data from the third quarter of 2025 to the third quarter of 2026 to determine the annual cost-of-living adjustment for Social Security and Supplemental Security Income benefits for 2027.

The programmes benefit older Americans who have retired as well as the disabled and certain widows, widowers and children.

The Senior Citizens League, one of the nation’s biggest seniors groups, projected a 3.5 per cent COLA raise in 2027. That would be up from 2.8 per cent in 2026, and would lift the average monthly benefit for retirees by US$67.90 to US$2,007. The Social Security Administration will announce the COLA increase for 2027 later on Wednesday. REUTERS