US consumer prices accelerated in September amid a surge in gasoline costs, dealing another blow to President Donald Trump and his Republican Party ahead of the November 3 midterm elections and putting an interest rate increase later this month back on the radar.
The US Consumer Price Index rose 0.6% last month after climbing 0.4% in August, the Labor Department’s Bureau of Labor Statistics said today.
In the 12 months to September, the CPI advanced 3.7% after rising 3.4% in August.
Economists polled by Reuters had forecast the CPI would gain 0.6% over the month and increase 3.6% on a year-over-year basis. Gasoline prices soared 7.1% 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% 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% in September, matching the gain in August.
In the 12 months to September, core CPI inflation increased 2.6% after advancing 2.4% in August.
The US Fed tracks the Personal Consumption Expenditures Price Index for its 2% inflation target. The core CPI measure is lagging core PCE inflation, which increased 3% 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%-4% range, the first hike in three years, and flagged further increases in borrowing costs in the months ahead.
Before today’s figures, financial markets assigned a roughly 22% chance of a rate hike at the October 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.
