US Consumer Prices Accelerate in September on Gasoline Surge, Keeping October Fed Hike on Table

11:26 AM EDT, 10/14/2026 (MT Newswires) -- Consumer prices in the US accelerated in September as a surge in gasoline lifted headline inflation, while core inflation held at 0.3% and topped forecasts, boosting bets on a second straight Federal Reserve rate hike this month. The consumer price index rose 0.6% from August, when it gained 0.4%, the Bureau of Labor Statistics said Wednesday. Gasoline accounted for over half of the increase. The reading matched the Bloomberg consensus. Core inflation, which excludes volatile food and energy items, held steady at 0.3% but exceeded Wall Street's projection for a deceleration to 0.2%. Annually, headline CPI inflation rose to 3.7% in September from 3.4% in August, the highest since May. Core inflation rose to 2.6% from 2.4%, matching June's pace. September's readings exceeded Wall Street's consensus estimates of 3.6% and 2.5%, respectively. The energy index jumped 5.2% month over month in September following a 2.1% rise the month before, marking the fastest pace since March. Fuel oil and gasoline surged 15.3% and 9.1%, respectively, the BLS data showed. "The larger than expected increase in the core CPI in September increases the odds that the Federal Reserve raises rates at its meeting later this month, which is our forecast," Oxford Lead US Economist Nancy Vanden Houten said in a note e-mailed to MT Newswires. The Fed raised rates unanimously on Sept. 16, its first hike in just over three years, to a range of 3.75% to 4%. The odds of the Fed hiking rates by 25 basis points at its Oct. 27-28 meeting rose to 44% on Wednesday from 22% on Tuesday, according to the CME FedWatch tool. Markets are pricing in a 56% probability that the benchmark rate will be kept steady, down from 78%. Minutes released earlier this month showed most Fed participants saw another hike as likely appropriate by year-end, with future moves dependent on incoming data. Data released late last month showed the Fed's preferred inflation metric came in softer than expected on an annual basis in August following downgraded readings for July. The headline and core PCE inflation stood at 3.4% and 3.0%, respectively, in August. "With core inflation running at 2.6% year-on-year and oil prices remaining elevated, which increases the risk that price pressures spread to other categories, the Fed likely will not be able to remain on the sidelines for much longer," said Admir Kolaj, economist at TD Economics.