US inflation heats up in September; Fed rate hike this month back on table
TLT•The Consumer Price Index rose 0.6% in September and 3.7% year over year, while core CPI increased 0.3% for the month. Markets raised the odds of a Federal Reserve rate hike at its October meeting to about 52%, from roughly 22% before the report.
1. Prices accelerate
The Consumer Price Index rose 0.6% in September after climbing 0.4% in August, and was up 3.7% from a year earlier. Gasoline prices surged 9.1%, accounting for more than half of the monthly increase. Food prices were unchanged.
2. Core inflation exceeds forecasts
Core CPI, excluding food and energy, rose 0.3% in September, above economists’ 0.2% forecast, and increased 2.6% year over year. Shelter costs rose 0.4%, including a 0.3% increase in owners’ equivalent rent.
3. Rate-hike odds rise
Markets put the chance of a rate hike at the Fed’s October 27-28 meeting at roughly 52%, up from about 22% before the CPI report. Treasury yields were mostly higher, the dollar advanced, and US stocks opened lower. The Social Security Administration announced a 3.6% cost-of-living adjustment for benefits in 2027.
