US CPI to Show Overall Inflation Boosted by Higher Gasoline Prices

(Bloomberg) -- Higher gasoline prices probably led to quicker overall US inflation in September even as underlying price pressures moderated, supporting views that the Federal Reserve will refrain from raising interest rates this month.

The closely-watched consumer price index is seen rising 0.6% after a 0.4% increase a month earlier, based on the median projection in a Bloomberg survey of economists ahead of Wednesday's Bureau of Labor Statistics release. That would mark the largest advance in five months.

Excluding fuel and food, the so-called core measure probably rose 0.2%, a step down from August. Compared with a year earlier the core CPI is seen rising 2.5%, a touch firmer than the prior month when the annual increase was the smallest since 2021.

Following slower September payrolls growth, cooler underlying inflation reduces the urgency for the Fed to raise rates on Oct. 28 after hiking in September for the first in three years. The CPI data may also illustrate that so far, the rise in energy costs isn't being passed on in the form of higher prices for most other consumer goods and services.

"Our takeaway is that acceleration in inflation is mostly a story of localized hot spots, not broad-based price pressures. That's an important difference from the 2022 hiking cycle, and gives the Fed room to remain patient."

Anna Wong, Eliza Winger and Andrew Sacher. For full analysis, click here

Retail gasoline prices approached $4.50 a gallon in late September, the highest in four months. With jet fuel costs also picking up due to the Middle East conflict, the report may also show that airfares accelerated. On Friday, President Donald Trump announced a deal to import Russian diesel in a bid to tame soaring fuel prices.

Concerns about affordability and high prices have taken a toll on consumer confidence. While households so far have continued to spend, a key driver of the economy over the past six months, pessimism is growing.

Government figures out Thursday are projected to show retail sales growth cooled in September. Receipts at retailers probably rose modestly after increasing in August by the most in nearly two years.