September’s U.S. consumer inflation figures topped annual forecasts, with overall prices rising 3.7%, according to the Bureau of Labor Statistics. The rise was higher than expectations of 3.6%. Excluding food and energy, the annual increase was 2.6%, also above the projected 2.5%.
Gold futures fell $68 an ounce or 1.62%, to $4,109 after the release. The inflation figures reinforced the case for the Federal Reserve to retain a restrictive policy stance and leave interest rates elevated for longer.
The Fed had increased its overnight benchmark rate by a quarter percentage point last month, setting a range of 3.75%–4.00%. That move marked its first increase in three years, and policymakers indicated that additional rises in borrowing costs would follow in the coming months.
Before the consumer price data became available, CME Group’s FedWatch Tool put the probability of another increase at the October 27–28 meeting at about 22%. Expectations for an October move had weakened after disappointing September payroll growth and lower-than-forecast readings for personal consumption expenditures inflation in July and August.
On a seasonally adjusted monthly basis, the Consumer Price Index for All Urban Consumers advanced 0.6%, matching forecasts but accelerating from August’s 0.4% rise. The core measure increased 0.3%, unchanged from its August pace and above the anticipated 0.2%.
Gasoline was responsible for more than half of the overall monthly increase, with prices climbing 9.1%. Across the broader energy category, September’s 5.2% gain followed a 2.1% rise in August. Energy prices were 20.4% higher than a year earlier.
Housing-related costs also accelerated. The shelter measure increased 0.4%, compared with 0.3% in August. Meanwhile, food prices showed no overall monthly change, although the components moved in opposite directions: food away from home rose 0.2%, while food purchased for consumption at home declined 0.1%. Over 12 months, the food measure increased 2.5%.
Other categories recording monthly increases included apparel, medical care, airline fares, education, recreation, and used cars and trucks. Communication was one of the few major categories to register a decline.
The annual figures also showed faster inflation than in August. Overall price growth, measured before seasonal adjustment, rose from 3.4% to 3.7%, while the core annual rate moved from 2.4% to 2.6%.
