The much-anticipated U.S. consumer price data on Wednesday may indicate that inflationary pressures are intensifying, as energy costs continue to rise.
Economists surveyed by Dow Jones expect that the overall Consumer Price Index ( CPI ) in September will rise by 0.6% month-on-month and 3.6% year-on-year. This 12-month data will indicate that the pace of price increases is accelerating and is moving further away from the Federal Reserve's target of 2%.
Excluding the more volatile prices of food and energy, the so-called core inflation is expected to rise by 0.2% from August, and by 2.5% year-on-year. Although this indicates a slight slowdown from last month, year-on-year inflation will still be on the rise.
Upward risk
Joe Brusuelas, the chief economist of tax firm RSM, stated that oil-related prices could push the overall CPI even higher.
Since the war between the United States and Iran began earlier this year, energy costs have been one of the biggest drivers of inflation. U.S. President Donald Trump announced last week that he would relax restrictions on Russian diesel in an attempt to boost global oil trade, but analysts do not believe this will significantly lower oil prices.
Global crude oil benchmark Brent prices rose by more than 14% in September, bringing the cumulative increase for the third quarter to around 42%. On Tuesday, Brent crude oil prices traded around $105 per barrel.
Brusuelas said, "There is indeed a significant upward risk in September CPI. Usually, when inflation experiences such fluctuations, everyone's models underestimate the actual outcome."
Robert Sorkin, the chief economist of asset management firm PGIM in the United States, stated that stubborn oil prices could also drive up the costs of other non-energy commodities. In such a scenario, it would be more difficult for the Federal Reserve to regard the surge in energy prices as a short-term shock that does not warrant interest rate hikes.
After announcing its first interest rate hike in three years last month, the Federal Reserve hinted in the minutes of that meeting that another hike might be necessary. According to the FedWatch tool from CME Group ( CME ), traders of federal funds futures expect that the Fed's next interest rate hike will occur at its December policy meeting.
Sokkin said, "In our view, there are many reasons to support interest rate hikes. Ultimately, we are not very confident about the timing of the Fed's next move, but we are more certain about the direction of its actions."
The data released on Wednesday, CPI, will be the last CPI reading before the mid-term elections in November, which may determine whether the Republican Party can continue to have full control of Washington.
According to consumer confidence data from the University of Michigan, economic confidence among people with different political affiliations has been declining this year. The data shows that compared to Democrats, the decline in confidence among Republicans and independent voters has been more pronounced since the beginning of 2026.
Economists expect that the Producer Price Index ( PPI ) to be released on Thursday – a measure of the inflationary pressures faced by wholesalers – to rise by 0.6% from August and by 5.5% year-on-year. Both figures are expected to show a moderate acceleration from the data released in August.
