September CPI Forecast Shows Energy-Driven Inflation Spike

Economists anticipate a notable acceleration in both headline and core inflation for September, driven primarily by surging energy costs. Forecasts point to a significant monthly jump in the consumer price index, pushing the annual rate further above the Federal Reserve's target. The data will be the last major inflation reading before the central bank's October policy meeting and the November midterm elections.

Economists polled by Dow Jones expect the headline consumer price index for September to rise 0.6% for the month and 3.6% compared with a year ago. That annual figure would mark an acceleration from the 3.4% rate recorded in August. Core CPI, which strips out food and energy, is expected to rise 0.2% for the month and 2.5% annually, a slight moderation. Forecasters also expect the producer price index to rise 0.6% from August to September and 5.5% on a 12-month basis. Both PPI numbers would mark a modest acceleration in growth.

Oil prices surge and their broader inflationary impact

Brent crude prices have risen sharply, with analysts warning that persistent energy costs are feeding into broader inflation. Brent prices recently traded around $105 per barrel. The global oil benchmark posted a gain of more than 14% in September alone, lifting its total third-quarter advance to around 42%.

Energy costs have been among the biggest drivers of inflation. Robert Sockin, chief U.S. economist at asset manager PGIM, said persistently high oil prices risk bleeding into unrelated spending categories. This complicates the Fed's ability to dismiss the energy spike as a transitory phenomenon that warrants no policy response.

Central bank policy response under pressure

Despite a recent rate hike, Federal Reserve officials and economists signal further tightening may be needed. The Fed raised interest rates by a quarter point in September-its first increase since 2023-and signaled at least one more hike was likely. Fed funds futures traders currently anticipate the central bank will next raise rates at its December meeting, according to CME's FedWatch tool.

Market-implied odds of an October increase had retreated to 22% by Monday, compared with 55% in the immediate aftermath of the Fed's September decision. Robert Sockin said the list of reasons to hike rates is long. He added that while the timing is uncertain, the direction of travel is clear.

Broader economic and political context

The upcoming CPI release comes amid declining consumer confidence and serves as the final economic indicator before the midterm elections. Consumer confidence fell to its lowest level since 2014 in September. The Conference Board's index dropped 6.7 points to 81.9, far below economist forecasts. References to oil and gas prices in particular rose to new heights in the survey's write-in responses.

Economic confidence across political affiliation has fallen this year. Compared with Democrats, Republican and independent voters have posted steeper declines in sentiment since the start of 2026. The Institute for Supply Management's manufacturing prices index climbed 6.8 percentage points in September to 77.9. The increase was driven by higher petroleum-based product prices, steel and aluminum costs, and tariffs. No commodity category reported a price decrease for the month.

Expert warnings on inflation forecasting risks

Leading economists caution that current models may again underestimate inflation, particularly given sticky oil prices. Joe Brusuelas, chief economist at RSM, said oil-related prices could push the headline figure even higher than forecasters expect. "We've got real upside risk on the September CPI," Brusuelas said. He added, "Typically, when we have these moves in inflation, everyone's models undershoot the actual outcome."

President Donald Trump recently announced loosened diesel restrictions on Russia in a bid to boost the global oil trade. Analysts do not believe this move will meaningfully bring down prices. The Bureau of Labor Statistics is scheduled to release the report at 8:30 a.m. ET on Wednesday.