The annual inflation rate increased modestly to 3% in September, up from August’s 2.9% annual rate, with a recent jump in gasoline prices and higher energy costs noted in the latest data, the U.S. Bureau of Labor Statistics reported on Friday.
On a monthly basis, the index for gasoline rose 4.1% in September and was the largest factor in the all-items monthly increase, as the index for energy rose 1.5% over the month. The food index and shelter index each increased 0.2% over the month.
Core inflation, which excludes more volatile food and energy prices, rose 0.2% for the month of September, after rising 0.3% in each of the two preceding months. Indexes that increased over the month include shelter, airline fares, recreation, household furnishings and operations, and apparel. The indexes for motor vehicle insurance, used cars and trucks, and communication were among the few major indexes that decreased.
On an annual basis, the all-items index rose 3.0% for the 12-month period ending September, after rising 2.9% over the 12 months ending August. The all-items less food and energy index also rose 3.0% over the last 12 months.
The energy index increased 2.8% for the 12 months ending in September. The food index increased 3.1% compared to September 2024 and the cost of shelter was up 3.6% during the same period.
Other categories that have increased significantly over the past 12 months include natural gas (+11.7%), electricity (+5.1%), used cars and cars and trucks (+5.1%). Although food prices overall are up 3.1% compared to a year ago, some items within that category have seen dramatic increases including coffee (+18.9%) and uncooked beef/veal (+14.7%). Egg prices are down 1.3% compared to a year ago.
The CPI report is more than a week late because the government shutdown stopped the bureau’s work on economic data. After first saying there would be no CPI report for September, the bureau changed its mind because of the need for inflation data to determine the cost-of-living adjustment (COLA) in 2026 for Social Security recipients.
The Social Security Administration separately announced Friday that 75 million retirees and other beneficiaries will see a 2.8% increase in the COLA, which works out to about $56, starting in January 2026.
The stock market was up following the release of the inflation report, reflecting investors’ optimism that the modest rise in inflation during September would not derail the Federal Reserve Board’s expected cut to interest rates at its meeting next week. At its last meeting, the Fed cut interest rates by a quarter of percentage point.
The Fed’s decision on whether to cut rates again and by how much is complicated by the fact that no U.S. jobs report has been released since the August data was reported on Sept. 5. Additionally, the Trump administration has also said that there is unlikely to be another inflation report next month because of the ongoing government shutdown.
