Markets

Inflation Reached 3.7% in September, and Core Came In Hotter Than Forecast

Consumer prices rose 0.6% in September and 3.7% from a year earlier, above the 3.6% consensus. Core CPI rose 0.3% against 0.2% expected, and markets moved toward pricing a second Fed hike this month.

Oct 15, 2026

The September Consumer Price Index, released at 8:30 a.m. ET on October 14, showed prices up 0.6% in the month and 3.7% from a year earlier. Annual inflation had held at 3.4% for two months, and economists had expected 3.6%.

The headline number was mostly about fuel. Gasoline prices rose 9.1% in September alone and are 34.2% higher than a year ago; on their own they accounted for more than half of the monthly increase. The energy index is up 20.4% over twelve months and airline fares 22.4%. AAA's national average for a gallon of gasoline was $4.33 on Wednesday, compared with $2.98 before the war, according to figures cited by CBS News.

What changed the market's mood was the smaller number. Core CPI, which leaves out food and energy, rose 0.3% in the month against a 0.2% consensus, and 2.6% from a year earlier against 2.5% expected. In August it had been 2.4%. Shelter and used cars pushed core higher. A tenth of a percentage point sounds trivial, but core is the measure the Federal Reserve treats as the underlying trend, and it is now moving in the same direction as the headline.

The Fed raised rates in September for the first time since 2023, to a range of 3.75% to 4%, and signalled more increases were possible. Its next decision is due on October 28. Capital Economics said markets were pricing roughly a 50% chance of another hike at that meeting after the report, up from about 20% before it.

Stocks took the news badly. The S&P 500 fell 1.11% to 7,718.94, its worst day since July 29, and the Nasdaq Composite 1.88% to 26,692.87. The Dow held up much better, down only 0.09%, because healthcare and energy stocks rose. In the bond market, the 10-year Treasury yield jumped to 5.33% after the release and then fell back to close at 5.19%, about three basis points lower on the day. The dollar index rose 0.36%.

Producer prices and retail sales for September are both due at 8:30 a.m. ET on October 15. Economists expect producer prices to have risen 0.6% in the month and 5.5% over a year, after 0.4% and 5.4% in August.