US Inflation Rises to 3.7% in September as Energy Costs Surge and AI Price Pressures Peak

U.S. consumer prices climbed 0.6% in September, driving the annual inflation rate up to 3.7% from 3.4% in August. Core consumer prices, which exclude volatile categories, grew 0.3% over the month and 2.6% from a year earlier. Surging energy costs accounted for much of the monthly increase, highlighted by a 9.1% jump in gasoline prices alongside increases in shelter and used vehicle costs.

The persistent price pressures keep inflation well above the Federal Reserve's 2% annual goal. In response to elevated inflation, central bankers raised interest rates in September for the first time since July 2023, and officials have signaled that another rate increase remains possible this year. However, economists at Goldman Sachs project that inflation tied to artificial intelligence technologies—currently adding about 45 basis points to core PCE inflation—is close to peaking at 50 basis points by the end of 2026 before declining significantly in 2027.

Investors will be watching how energy prices evolve alongside Federal Reserve policy decisions heading into 2027. If artificial intelligence hardware costs moderate as expected, headline inflation may increasingly depend on oil and energy market developments, influencing performance across growth-focused exchange-traded funds including Invesco QQQ Trust (QQQ) and Vanguard S&P 500 Growth ETF (VOOG).