US Inflation Rises to 3.7% on Gasoline Jump, S&P 500 Closes Lower

US consumer prices rose 3.7% in the 12 months to September, slightly above the 3.6% consensus, according to the U.S. Bureau of Labor Statistics. The figure, released today at 13:30 UK time, compares with 3.4% in August. On the month, prices rose 0.6%, matching consensus and up from 0.4% in August. The S&P 500 fell after the release, kept sliding through the session and closed down 1.31%.

What was announced

The consumer price index (CPI) measures the change in what households pay for a basket of goods and services. The September annual rate of 3.7% was 0.1 percentage points above the 3.6% consensus, and 0.3 points above August’s 3.4%. The monthly rise of 0.6% was in line with consensus.

September CPI	Actual	Previous	Consensus
12 months	3.7%	3.4%	3.6%
Month on month	0.6%	0.4%	0.6%

The annual rate is the only line that came in above expectations, and it did so by a single tenth of a point. The larger story is the step up from August on both measures.

What drove the monthly rise

Gasoline was the main driver. The Bureau said gasoline accounted for over half of the monthly increase.

The index for gasoline rose 9.1 percent in September, accounting for over half of the monthly all items increase.

U.S. Bureau of Labor Statistics

The wider energy index rose 5.2% on the month. Core CPI, which strips out food and energy, rose 0.3% on the month and 2.6% over 12 months, up from 2.4% in August.

Market reaction after the release

The S&P 500 opened its 15-minute bar starting at 13:30 UK time at 7,834.77 and closed that bar at 7,784.10. It kept sliding through the session and ended today at 7,703.29, down 1.31% from yesterday’s close of 7,805.45. The move followed the release.

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The Nasdaq also fell through the session, by about 1.55% from the start of US trading to the evening.

What it means for UK traders

The Federal Reserve’s target range for interest rates stands at 3.75% to 4.00%.

The detail to watch is whether the gasoline jump carries into other prices. Core inflation at 2.6%, up from 2.4%, is the measure that excludes energy and food.