The Latest Inflation Data Is Expected to Show Price Increases Are Accelerating

The consumer price index (CPI) data, set to be released on Wednesday, is anticipated to provide insights into growing inflationary pressures, particularly as energy costs continue to rise.

Economists surveyed by Dow Jones predict that the headline CPI for September will increase by 0.6% on a monthly basis and by 3.6% year-over-year. This year-over-year figure indicates that the pace of price increases is accelerating, deviating further from the Federal Reserve's target inflation rate of 2%.

Core inflation, which excludes the more volatile food and energy sectors, is forecasted to rise 0.2% from August and 2.5% over a 12-month period. While this represents a slight deceleration from the previous month, it nonetheless signifies an increase in annual inflation.

Upside Risk

Joe Brusuelas, chief economist at RSM, indicated that prices related to oil may drive the headline figure even higher.

Since the onset of the U.S. conflict with Iran earlier this year, energy costs have been significant contributors to inflation rates. Recently, President Donald Trump announced a reduction in diesel restrictions on Russia, aiming to stimulate the global oil market; however, analysts remain skeptical about any substantial reductions in prices as a result.

In September, Brent crude, the global oil benchmark, saw its prices surge by over 14%, resulting in a third-quarter increase of approximately 42%. On Tuesday, Brent crude was trading around $105 per barrel.

According to Brusuelas, there is recognized "upside risk" concerning September's CPI. He noted that historical trends show models often fall short in predicting actual inflation outcomes during such increases.

Moreover, persistent high oil prices may drive up costs for various non-energy goods, as highlighted by Robert Sockin, chief U.S. economist at PGIM. Should this scenario unfold, the Federal Reserve may struggle to dismiss the surge in energy prices as a mere short-term shock that does not require interest rate adjustments.

Following the Federal Reserve's initial rate hike in three years last month, the minutes from that meeting indicated that further rate increases are probable. Market participants expect the central bank to raise rates again during its December policy meeting, according to CME's FedWatch tool.

Sockin remarked, "The list of reasons to hike rates in our view is long." He added that while there is uncertainty regarding the timing of the Fed's next action, there is strong conviction regarding the overall direction of policy.

Wednesday's CPI release marks the final report before the November midterm elections, which may influence the Republican party's ability to maintain control in Washington.

Consumer confidence across party lines has declined this year, based on the University of Michigan's consumer sentiment data. Republican and independent voters have experienced sharper declines in sentiment since the beginning of 2026, especially when compared to their Democratic counterparts.

Economists also anticipate that the producer price index (PPI), which measures inflation impacting wholesalers, will register a growth of 0.6% from August to September, and 5.5% on an annual basis. Both figures would indicate a modest increase in inflationary growth compared to the PPI data released in August.