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September CPI: Inflation Jumps to 3.7% as Gas Prices Soar

War-driven energy costs did most of the damage, but core prices also beat forecasts, and paychecks lost ground less than three weeks before the midterms.

Quick take

  • Consumer prices rose 0.6% in September and 3.7% from a year earlier, up from 3.4% in August and above the 3.6% economists expected.
  • Gasoline jumped 9.1% in one month and 34.2% over the year, accounting for more than half of the monthly increase.
  • Core inflation, which leaves out food and energy, rose to 2.6%, also above forecasts.
  • Real hourly pay fell 0.5% in the month, and markets now see roughly even odds of another Fed hike at the Oct. 27–28 meeting.

Why it's trending The Bureau of Labor Statistics released September’s consumer price index on Oct. 14, and the numbers came in hotter than economists expected.

The numbers at a glance

Category Monthly change Annual change
All items +0.6% +3.7%
Core (excludes food and energy) +0.3% +2.6%
Energy +5.2% +20.4%
Gasoline +9.1% +34.2%
Fuel oil +74.2%
Shelter +0.4%
Food 0.0%
Airline fares +22.4%

Bureau of Labor Statistics data as reported by CBS News, Forbes and SHRM. Blank cells weren’t included in those reports.

Why energy is doing the damage

Energy prices have climbed through 2026 as the war with Iran, which began in late February, choked oil shipments out of the Persian Gulf, while Russia’s war in Ukraine keeps pressure on fuel markets, CBS News reports. For more on the shipping crisis, see our explainer on the attacks in the Strait of Hormuz.

Regular gas averaged $4.33 a gallon nationally on Oct. 14, according to AAA, compared with $2.98 before the fighting started. Diesel set a record of $6.29 in late September. Because trucks, trains and ships run on diesel, that cost tends to spread into groceries and almost everything else that gets shipped.

What it means for your wallet

Some quick math: a household that buys 50 gallons of gas a month is now paying about $67 more than it did before the war.

Paychecks aren’t keeping up. Average hourly pay rose just 0.1% in September while prices rose 0.6%, so real earnings fell 0.5% in a single month, according to BLS figures reported by SHRM.

There were a couple of bright spots. Overall food prices were flat, and grocery prices dipped 0.1%. Flying is another story: airfares are up more than 22% from a year ago.

The Fed’s dilemma

In September the Federal Reserve raised interest rates for the first time since 2023, to a range of 3.75% to 4%, and signaled more increases could follow. After this report, Capital Economics said markets were pricing in about a 50% chance of another hike at the Oct. 27–28 meeting, up from about 20% beforehand, according to CBS News. The Fed meets again Dec. 8–9, and its target is 2% inflation.

The tricky part is that most of this inflation comes from an energy supply shock, which higher interest rates can’t fix directly. With core prices also edging up, though, the Fed is wary of higher prices becoming entrenched.

The political backdrop

The report landed less than three weeks before the Nov. 3 midterm elections, with the cost of living among voters’ top concerns, Forbes notes.

Quick answers

What is the current U.S. inflation rate?

3.7% for the 12 months through September 2026, up from 3.4% in August.

Why is inflation going up?

Mostly energy. Gasoline, diesel and fuel oil prices have surged since the war with Iran disrupted Gulf oil shipments. Shelter and used-car prices also pushed core inflation higher.

When is the next CPI report?

The October report is due in November. The Bureau of Labor Statistics lists exact dates on its release calendar.

Sources

  1. CBS News September CPI report shows inflation accelerated to 3.7% as energy costs soaredOct. 14, 2026
  2. Forbes Annual Inflation Rate Rose To 3.7% In September—High Energy Costs Push Prices UpOct. 14, 2026
  3. SHRM Inflation Jumps to 3.7% as Gas Prices SurgeOct. 14, 2026