Hot CPI inflation print puts October rate hike in play

Both headline and core CPI came in higher than consensus forecasts

Hot CPI inflation print puts October rate hike in play

Both headline and core CPI came in higher than consensus forecasts

Consumer price inflation continued to trend in the wrong direction in September, according to government estimates published Wednesday.

Across all categories, the consumer price index (CPI) posted 3.7% growth from a year ago, reflecting a 0.6% rise from the August report. Prices rose at their fastest pace since April and accelerated from 0.4% growth the previous month.

Core inflation, which strips out volatile food and energy prices, matched August’s 0.3% increase, pushing core CPI up 2.6% year over year. That increase exceeded consensus forecasts from economists polled by Dow Jones and Bloomberg, who had expected 0.2% and 2.5% growth, respectively.

Advertisement

Federal Reserve policymakers are scheduled to meet in two weeks to weigh a possible interest rate hike after officials raised the federal funds rate by a quarter-point in September to a target range of 3.75% to 4%.

With inflation well above the U.S. central bank’s stated 2% target, a symphony of Fed officials have said they believe additional rate hikes will be necessary to combat rising cost pressures. Inflation has accelerated in 2026 due to global energy and trade shocks, massive spending on artificial intelligence and Trump administration tariffs, among other pressures.

Sam Williamson, senior economist at First American Financial Corp., says the latest inflation data puts a Fed rate hike back in play for October, after the likelihood of a rate hike this month had diminished in recent weeks — especially with November midterm elections looming. The Fed typically steers clear of policy adjustments right before elections to avoid appearing political.

“Before the report, markets largely expected the central bank to wait until December for its next rate hike, following its first increase in three years last month,” Williamson said in an email to Scotsman Guide. “With both headline and core inflation exceeding forecasts, policymakers may instead move that hike forward to October.”

Market-implied odds that the Fed would raise the federal funds rate by an additional 25 basis points at its October meeting jumped to nearly 50% after Wednesday’s inflation data landed. That compared to just 22% odds the previous day, according to CME FedWatch, which tracks fed funds futures prices.

Higher prices for consumers were relatively broad-based last month, with inflation accelerating 0.3% across core good and 0.4% for core services. Those categories had posted 0.1% and 0.3% growth in August.

Meanwhile, the shelter index rose 0.4% over the month compared to 0.3% and 0.1% increases in August and July. Energy costs jumped for a second straight month, contributing to higher headline inflation overall.

September also marked the sixth consecutive month that annual gains in the CPI exceeded year-over-year wage gains for workers, underscoring the deepening pessimism consumers have reported about the economy over the course of 2026.

Author

More Headlines

Top Dollar Volume

Top FHA Volume

Top HELOC Volume

Most Loans Closed

Top Mortgage Brokers

Top Non-QM Volume

Top Purchase Volume

Top Refinance Volume

Top USDA Volume

Top VA Volume

Top Veteran Originators

Top Jumbo Originators

Top Women Originators

Top Overall

Top Wholesale

Top Retail

Top Non-QM

Top FHA

Top VA

Top Correspondent

Sign in to Scotsman Guide PRO

error: Content is protected !!

✓ You're all set!

Your account has been successfully claimed!
You’re now logged in and ready to go.

We found an account with this email.
Please log in or reset your password to continue.