US inflation heats up in September; Fed rate hike this month back on table

In September, consumer prices in the United States surged, with gasoline costs skyrocketing and putting an interest rate increase later in the month back on the table. This development further strained President Donald Trump and his Republican Party as they prepared for the November 3 midterm elections, revealing concerns among economists that inflation might become entrenched.

The Federal Reserve's interest rate decision this month now appears more likely than previously anticipated, according to financial markets. The Consumer Price Index (CPI) report from the Labor Department indicated that price pressures were expanding beyond energy, raising worries about persistent inflation. A Reuters/Ipsos poll revealed that 78% of Americans blamed Trump's policies for the rising costs, which outpace wage growth.

Jeffrey Roach, chief economist at LPL Financial, cautioned that navigating the road back to price stability could prove challenging. The CPI rose 0.6% in September, matching expectations, with gasoline prices accounting for more than half of the increase. Food prices remained steady, while nonalcoholic beverages surged 0.9% and fruits and vegetables rose 0.5%.

Core inflation, which excludes volatile food and energy components, rose 0.3% in September, meeting forecasts. The US central bank's inflation target of 2% is tracked by the Personal Consumption Expenditures Price Index (PCE).