Despite easing underlying price pressures, rising gasoline prices could push overall U.S. inflation higher in September, reinforcing expectations that the Federal Reserve will not raise interest rates this month.
According to a Bloomberg survey of economists ahead of Wednesday’s release of data from the U.S. Bureau of Labor Statistics, the closely watched Consumer Price Index is expected to rise 0.6%, following a 0.4% increase in August—the largest gain in five months.
Excluding food and energy, so-called core CPI is projected to rise 0.2%, down from August. On an annual basis, core CPI is expected to climb 2.5%, slightly above last month’s rate, which was the smallest year-on-year increase since 2021.
Slower nonfarm payrolls growth in September, combined with cooling underlying inflation, has reduced the urgency for the Fed to hike rates again on October 28—its first such move in three years. The CPI data may also suggest that rising energy costs have not yet been passed on to most other consumer goods and services.
By late September, retail gasoline prices approached $4.50 per gallon, a four-month high. The report may also show accelerating airfare increases due to higher jet fuel costs driven by Middle East conflicts. On Friday, former President Donald Trump announced a deal to import Russian diesel in an effort to curb soaring fuel prices.
Concerns over household spending power and high prices are weighing on consumer confidence. Although household spending has been a key driver of economic growth over the past six months, pessimism is spreading.
Government data released Thursday is expected to show slower retail sales growth in September. After retailers posted their largest gain in nearly two years in August, sales may see only modest growth in September.
This week’s U.S. economic calendar is packed, including the producer price index for September and the Fed’s industrial production report. Data released Tuesday by the National Association of Realtors suggests that existing home sales were likely soft last month.
On Wednesday, the Fed will release its Beige Book, a regional economic outlook survey.
