The upcoming consumer price index (CPI) report for September is anticipated to reveal increased inflationary pressures as energy costs continue to rise. Economists surveyed by Dow Jones predict a 0.6% increase in the headline CPI for the month, with a year-over-year increase of 3.6%. This figure suggests that the rate of price growth is accelerating, moving further from the Federal Reserve's target rate of 2%.
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Core inflation, which excludes volatile food and energy prices, is expected to rise by 0.2% from August and to show a 2.5% increase on a 12-month basis. Although this represents a slight slowdown from the previous month, it indicates an uptick in year-over-year inflation.
Joe Brusuelas, chief economist at RSM, indicated that rising oil prices could push the headline inflation figure even higher. He noted that energy costs have significantly contributed to inflation since the onset of the U.S. war with Iran this year. Recent actions by President Donald Trump, including the easing of diesel restrictions on Russia to boost global oil trade, are not expected to significantly lower prices. In September, Brent crude prices surged over 14%, marking a third-quarter increase of approximately 42%, trading around $105 per barrel on Tuesday.
Brusuelas emphasized that the inflation models often underestimate actual outcomes during such price surges. Additionally, Robert Sockin, chief U.S. economist at PGIM, mentioned that persistent oil prices might elevate costs in other categories beyond energy, complicating the Fed's ability to consider the spike in energy prices a temporary issue.
Following its first rate increase in three years last month, the Federal Reserve indicated in its meeting minutes that further hikes may be necessary. Fed funds futures traders expect the next rate increase to occur at the December policy meeting. Sockin commented on the many factors supporting a rate hike, expressing uncertainty about the timing but confidence in the anticipated direction.
The CPI release on Wednesday is the last before the November midterm elections, which could impact Republican control in Washington. According to data from the University of Michigan, economic confidence has declined among voters across party lines this year, with Republican and independent voters experiencing sharper declines in sentiment since the beginning of 2026.
Economists also anticipate a 0.6% increase in the producer price index (PPI) from August to September, with a year-over-year increase of 5.5%. These figures would indicate a modest acceleration in growth compared to the previous month's report.