US core CPI rose 0.3% month on month in September, exceeding market expectations for the second consecutive month, while headline CPI rose 0.6% month on month, in line with expectations. The data pointed to a resurgence in inflationary pressure and affected interest-rate expectations in financial markets.
US core CPI rose 0.3% month on month in September 2026, while the annualized year-on-year rate over the latest 3 months accelerated to 3.4%. Headline CPI rose 0.6% month on month, in line with market expectations, but core inflation exceeded expectations, confirming signs of a renewed pickup in inflation.
Within core CPI, core goods rose 0.3% and core services rose 0.4%, with both rates accelerating. In particular, services excluding housing, or supercore inflation, remained elevated. Wage pressures and persistent housing costs pushed up overall price growth. This brought expectations of continued Fed rate hikes into focus.
In financial markets, expectations for a rate hike at the October FOMC meeting remained limited, while the probability of additional rate hikes from December onward stayed high. Short- and long-term yields reacted after the release, while the dollar and equity markets showed signs of volatility and adjustment.
Year on year, both headline and core inflation accelerated. The rise in energy prices was a particular contributor, while falling real wages increased uncertainty about the outlook for consumption. The data again highlighted the need to balance the Fed's efforts to contain inflation against the risk of an economic slowdown.