U.S. inflation accelerated in September 2026, raising fresh concerns that the Federal Reserve may struggle to bring price increases under control without keeping interest rates higher for longer.
CPI
The Consumer Price Index (CPI) rose by 3.7% over the year to September, up from 3.4% in August. Monthly inflation reached 0.6%, driven largely by a sharp 9.1% increase in petrol prices. Core CPI, which excludes food and energy, rose by 2.6% annually.
The figures highlight the growing threat from rising energy costs, which can feed through into transport, manufacturing and household bills, putting further pressure on consumers.
PCE
Meanwhile, the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, showed annual inflation holding at 3.4% in August 2026.
Core PCE, excluding food and energy, stood at 3.0%. Monthly increases were 0.3% and 0.2%, respectively.
Both measures remain above the Fed’s 2% inflation target, complicating decisions over interest rates. Renewed inflationary pressure could delay rate cuts or increase the prospect of further tightening.
For financial markets, the combination of stubborn inflation, rising energy prices and elevated borrowing costs presents a challenging outlook.
Investors will be watching the next PCE figures, due on 29th October 2026, for clues about the direction of U.S. monetary policy.