The numbers
US consumer prices rose 0.6% from August to September, the Bureau of Labor Statistics said on Wednesday. That put the 12-month inflation rate at 3.7%, up from 3.4% in August and above the 3.6% that economists surveyed by Dow Jones had forecast.
Core prices, which exclude volatile food and energy costs, rose 0.3% for the month and 2.6% over the year. Economists had expected 0.2% and 2.5%. It was the first time in months that the underlying measure also came in above forecast.
Energy leads, but the pressure spreads
Higher petrol and energy costs did much of the work. The rise was also broader than a single pump price shock, with costs climbing across a range of goods and services that households buy every week.
Food inflation stayed firm, and consumers have told survey takers for months that the cost of living is their main worry. Consumer optimism had already fallen to its lowest level since 2014 in late September.
The timing is awkward for the White House and for both parties in Congress. The report arrived three weeks before midterm elections, and Democrats used it to tie pain at the pump to the administration's energy decisions. Republicans pointed to the same numbers as evidence that tax cuts have not yet reached household budgets.
What it means for the Fed
Inflation remains well above the Federal Reserve's 2% goal. Fed governor Michelle Bowman has said inflation is above target but that there is no urgency to move on rates, a position that keeps markets guessing about the next meeting.
Long-term Treasury yields have climbed in recent weeks, which raises borrowing costs on mortgages and business loans without any change in the policy rate. Traders are also watching a technology selloff that has pulled money out of risky bets and into bonds.
For now, the report removes the idea that price pressure is fading on its own. It also makes the next inflation print one of the most closely watched data releases of the year.