US Inflation Forecast to Rise to 3.6% in September on Higher Energy Costs
The United States Bureau of Labor Statistics is set to release the September consumer price index data, with economists expecting headline inflation to accelerate to 3.6% year-on-year from 3.4% in August. On a monthly basis, consumer prices are forecast to increase by 0.6%, marking the largest monthly gain in nearly five months. The anticipated rise is driven primarily by higher energy prices linked to ongoing tensions in the Middle East.
Despite the pickup in overall inflation, core consumer prices—which exclude volatile food and energy costs—are projected to rise 0.2% month-on-month and 2.5% compared to last year. This represents a slight moderation from August's 0.3% monthly pace. While surging fuel costs are raising airfares and transportation expenses, cooling housing inflation and discounted vehicle prices are helping ease underlying cost pressures across other sectors.
The upcoming inflation reading is the final report before the Federal Reserve meets on October 27–28 to decide on interest rates. Futures market data currently indicates a 17% chance of a rate hike at the October meeting. Federal Reserve officials remain divided on future policy moves, with some open to further rate increases while others see no immediate need for back-to-back hikes.
Key points
- Headline US CPI is expected to rise to 3.6% year-on-year in September, up from 3.4% in August.
- Monthly headline inflation is projected to increase 0.6%, driven largely by higher energy prices.
- Core inflation, excluding food and energy, is forecast to slow to 0.2% month-on-month and 2.5% annually.
- Markets currently price in a 17% probability of a Federal Reserve interest rate hike in October.
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What is the US inflation forecast for September?
Economists expect headline US inflation to rise to 3.6% year-on-year in September, up from 3.4% in August, with a projected 0.6% monthly increase driven mainly by higher energy prices.
What is expected for core inflation in September?
Core CPI, which excludes food and energy costs, is projected to increase 0.2% month-on-month and 2.5% year-on-year, reflecting a modest slowdown from the previous month.
Will the Federal Reserve raise interest rates in October?
Futures market data indicates a 17% chance of a rate hike at the Federal Reserve's October policy meeting, as officials remain divided on whether additional rate increases are necessary.