September CPI Rises 0.6%, Core Inflation Exceeds Expectations
By TopHolding Editorial · Tuesday, October 13, 2026 at 8:00 PM
Inflation remains a significant concern as the Consumer Price Index (CPI) increased 0.6% in September, pushing the annual rate to 3.7%. Core CPI, excluding food and energy, rose 0.3%, surpassing consensus forecasts and highlighting persistent price pressures.
According to Nate Gerze, Economist, Brian S. Wesbury, Chief Economist, and Robert Stein, Deputy Chief Economist at First Trust Portfolios, the Consumer Price Index (CPI) climbed by 0.6% in September, aligning with consensus expectations and bringing the year-over-year increase to 3.7%. The economists note that energy prices were a primary driver, surging by 5.2% in September, contributing to a 20.4% rise over the past year. Gasoline prices alone jumped 9.1%, accounting for more than half of the headline CPI increase for the month. Food prices, however, remained unchanged.
The report highlights that the "core" CPI, which excludes volatile food and energy components, advanced by 0.3% in September, exceeding the consensus forecast of +0.2%. This marks the second consecutive month core CPI has risen by 0.3%, pushing its year-over-year increase to 2.6%. Wesbury, Gerze, and Stein point out that housing rents have been a major contributor to core inflation but showed a trend toward slower gains in 2026, increasing by 0.3% in September. Other notable contributions to price increases included airline fares (+1.2%), hotels (+2.3%), used vehicles (+0.7%), and college tuition (+1.2%), partially offset by declines in internet services (-1.3%) and prescription drugs (-1.2%).
A concerning aspect of the report, according to the First Trust economists, is the decline in real average hourly earnings. These inflation-adjusted wages fell by 0.5% in September, continuing a trend that has seen them decrease by 0.7% over the past year. The commentary also emphasizes that both headline and core inflation have remained above the Federal Reserve’s 2.0% target for 66 consecutive months. The economists acknowledge that while rate hikes impact interest-sensitive sectors, they suggest that inflation will persist until supply-side conditions improve. They expect another rate hike in December, although not at the upcoming meeting later this month.
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Key terms
1. Consumer Price Index (CPI): A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
2. Core CPI: A measure of inflation that excludes certain volatile categories, such as food and energy prices, to provide a clearer picture of underlying price trends.
3. Real Average Hourly Earnings: The average hourly earnings of workers adjusted for inflation, indicating the actual purchasing power of wages.
Source: Nate Gerze, Economist, Brian S. Wesbury, Chief Economist, and Robert Stein, Deputy Chief Economist, First Trust Portfolios — Data Watch. Read the original at ftportfolios.com.
