Inflation climbs as gas prices surge

Inflation is proving harder to shake than a political campaign ad in mid-October. Consumer prices climbed faster in September than experts even predicted, driven by a surge in energy costs.

Inflation steps on the gas

US consumer prices rose 3.7% in September compared to a year earlier, per the latest Consumer Price Index, up from 3.4% in August and slightly above the 3.6% economists had predicted.

Core inflation, which excludes often-volatile food and energy prices, rose 2.6% annually and 0.3% from August, both slightly higher than expected.

• Gasoline prices jumped 9.1% from August to September, more than double the previous month's increase.
• They're now up 34% over the past year, as the ongoing conflict in Iran continues to push oil and gas prices higher—including a 74% annual increase in fuel-oil.

Americans' paychecks aren't keeping up. Average hourly earnings increased at a 3.0% annual rate in September, compared to the 3.7% rise in consumer prices, marking the sixth consecutive month that inflation has outpaced average US wage growth.

Looking ahead… The hotter-than-expected inflation report places greater pressure on the Federal Reserve to raise interest rates again this year and keep them elevated for longer. But higher borrowing costs could also weigh on economic growth, further complicating matters for Fed policymakers ahead of their next meeting in two weeks.