US inflation accelerated to an annual 3.7pc in September, led by higher energy costs as the Mideast Gulf war intensified.
The consumer price index (CPI) rose from 3.4pc in August, according to the Bureau of Labor Statistics (BLS). Headline inflation was last higher at 4.2pc in May and had fallen since then. Analysts surveyed by Trading Economics had forecast a median gain of 3.6pc for September.
So-called core inflation, which strips out food and energy, rose by 2.6pc in September, up from 2.4pc.
The energy index rose by 20.4pc in September from a year earlier and was up from 16.3pc the prior month. Energy commodities rose by an annual 35.3pc, up from 28pc the prior month, the BLS said.
Gasoline rose by an annual 34.2pc, compared with 27.4pc the prior month. On a monthly basis, gasoline rose by 9.1pc in September, accounting for over half of the monthly gain in the headline index, BLS said.
Fuel oil rose by 74.2pc in September from a year earlier and was up from 52pc the prior month.
Services less energy services, considered a core services measure, rose by 3.1pc, up from 3pc.
War-driven rise
Inflation has been accelerating since the US-Israeli war on Iran broke out at the end of February, as energy flows through the strait of Hormuz and nearby Red Sea have been constrained. Rising borrowing costs in the US and elsewhere amid accelerating inflation is raising sovereign debt loads to levels that the IMF this week warned poses a threat to global financial market stability.
Following the release of the BLS report, the CME FedWatch tool showed a 53.7pc probability the Federal Reserve would hike its target rate by a quarter point at its next meeting on 28 October, up from 22.1pc on Tuesday. Odds of one or two hikes by December were at 96pc Wednesday. The Fed raised its rate by a quarter point at its meeting in September, the first increase since 2023.
On a monthly basis, prices rose by 0.6pc in September, up from 0.4pc in August and compared with 0.1pc in July. Core prices rose by a monthly 0.3pc in September, matching the gain in August and up from 0.2pc in July.
Electricity rose by an annual 4.4pc in September, up from 3.8pc in August. Piped gas rose by 5pc, up from 4.4pc.
New vehicle prices rose by 0.6pc, unchanged from the prior month.
The food index rose by an annual 2.5pc, easing from 2.7pc the prior month.
Shelter rose by an annual 3.2pc in September, up from 3pc.
Transportation services rose by 2.7pc in September, compared with 2.4pc in the prior month.
Airfares rose by 22.4pc, easing from 23.4pc.
