Consumer Prices Rose 3.7% in September on Record Gasoline Costs

The consumer price index rose 3.7% in September from a year earlier, the Labor Department said Wednesday, up from 3.4% in August.

On a monthly basis, costs jumped 0.6% from August to September, the biggest gain in five months and up from a 0.4% increase the month before.

Gasoline prices drove most of the monthly jump, hitting record levels for the month of September. Energy and goods prices are still carrying the effects of the Iran war.

Core inflation cooled while the headline number climbed

Core inflation, which strips out food and energy, showed signs of moderating, though it stayed above the Federal Reserve's 2% target.

The split leaves the Fed with a messy call ahead of its late October meeting, weighing further rate hikes against signs of a slowing economy.

Economists at Glenmede and UBS had flagged ahead of the release that the key question was whether services inflation stays sticky and whether price pressures spread beyond energy.

Shelter costs, alongside gasoline and fuel oil, have been among the main contributors to elevated inflation.

Retirees get their 2027 raise from this number

The report is the final major piece of economic data the Social Security Administration needs to set the 2027 cost-of-living adjustment.

The adjustment runs off the consumer price index for urban wage earners, a measure critics say understates what retirees actually pay.

Medical costs eat nearly 30% of the average Social Security benefit. In 2026, a Part B premium increase of $17.90 consumed roughly a third of that year's adjustment.

Advocacy groups want the government to switch to the experimental index for the elderly, which tracks the out-of-pocket medical and housing costs of people 62 and older.

Americans over 75 spend triple what younger workers spend on health care.

Energy did the damage to the headline figure, core prices are easing, and the Fed's October decision now hinges on which signal it trusts more.