US inflation rises more than expected - here's what is happening with prices
The pace of price rises increased to 3.7% in the year to September, driving by higher motor fuel costs.
Key points
- US inflation rose to 3.7% in the year to September, up from 3.4% in August and above forecasts.
- Gasoline prices jumped 9.1% in September and energy inflation was up 20.4% over the year.
- Social Security benefits will rise by 3.6% in 2027, an average increase of $75 a month.
US inflation rose to 3.7% in the 12 months to September, up from 3.4% in August and above forecasts, according to the Bureau of Labor Statistics. The increase was driven by higher gasoline prices after disruption to Middle East energy supplies caused by the US-Israel conflict with Iran.
Gasoline prices jumped 9.1% in September alone and accounted for more than half of the rise in inflation. Energy inflation was up 20.4% over the year, with fuel oil up 74.2%.
What the data shows
The consumer price index tracks price changes for hundreds of everyday items including fresh food, gasoline and medical services. Food inflation was flat in September and 2.5% over the year, while core inflation, which excludes food and energy, was 2.6%.
Experts said the Federal Reserve, which sets interest rates and has a 2% target, will be watching whether energy costs start to affect other areas such as food prices.
Social Security adjustment
Shortly after the inflation figure was released, the Social Security Administration announced that benefits including old age, survivors and disability insurance would rise by 3.6% in 2027. The administration said this will mean an average retirement benefit increase of $75 a month.
The cost of living adjustment will take effect in January for about 72 million people, while increased payments for the 7.2 million receiving supplemental security income will start on 31 December.
Tariffs and inflation
President Donald Trump has introduced tariffs on most US trading partners. Most additional global levies were outlawed by the Supreme Court in February, and Trump immediately announced a new 10% global tariff to replace them.
Research from the Federal Reserve Bank of New York found exporters reduced prices very little in response, meaning US businesses absorbed nearly 90% of the added tax cost. The Fed found every percentage point increase in average tariffs led to nearly a 0.25% price increase for consumer goods after one year.
