Prices rose faster in September. Inflation hit 3.7% over the past year, up from 3.4% in August and higher than economists expected, the Labor Department said Wednesday. Gas did most of the damage, but this time prices also climbed for rent, used cars, clothes and plane tickets, which means it’s spreading beyond the pump.
Prices rose 0.6% in September alone. “The CPI was clearly hot, and there aren’t many ways to sugarcoat it,” said Adam Crisafulli of Vital Knowledge, CBS News reported.
Why did inflation go up in September?
Energy. Gas prices jumped 9.1% in one month and accounted for about half of September’s increase. Over the past year, gas is up 34.2%, energy overall 20.4% and heating oil 74.2%, CNBC reported. The national average for regular was $4.33 a gallon Wednesday, according to AAA, up from $2.98 before the war with Iran began in late February. Diesel, which trucks use to move almost everything you buy, averaged $6.29 after hitting a record in late September.
Which prices went up the most?
- Gas: up 34.2% from a year ago.
- Airfares: up 22.4% from a year ago.
- Rent and housing: up 0.4% in September alone.
- Used cars and trucks: up 0.7% for the month.
- Clothing: up 3.4% from a year ago, a category sensitive to tariffs.
- Groceries: flat for the month and up 2.5% from a year ago, the one bit of relief.
“Core” inflation, which leaves out food and energy, rose to 2.6% from 2.4%, also higher than forecast. Economists watch that number because it shows whether high prices are sticking around. “Energy prices being so high for so long is starting to seep into the broader economy,” Crisafulli said.
Will the Fed raise interest rates again?
The odds just went up. The Fed raised rates in September for the first time since 2023, to a range of 3.75% to 4%. After Wednesday’s report, futures traders put the chance of another hike at the Oct. 27-28 meeting at about 54%, and above 96% by year’s end, according to CME Group data cited by CNBC. If you carry a credit card balance, an adjustable-rate loan or a home equity line, that’s where you’ll feel it first.
The BeezLoop Take
The headline number is about gas, and gas is about the war with Iran. But the part that should worry people is the rest of the list: rent, cars, clothes, flights. When fuel stays expensive for months, it gets baked into what everything else costs to make and ship, and those prices don’t fall when gas does.
That leaves working families squeezed from both sides: higher prices now, and the Fed raising borrowing costs to fight them. Three weeks before the midterms, no amount of promised checks changes what people pay at the pump on Monday.
The open question: if the Fed keeps raising rates to fight prices driven by a war, does it cool inflation, or just make debt more expensive for the same people paying for gas?
Also on BeezLoop: what the big banks say about how Americans are holding up, and Trump’s Russian diesel deal to bring down fuel prices.
Sources: CBS News · CNBC · NBC News (video)
