U.S. Inflation Picks Up as Gas Costs Rise

A measure watched closely by the Federal Reserve showed inflation gaining speed in September. Consumer prices stood 3.6% above their level a year earlier, compared with 3.4% growth in August. Prices advanced 0.5% during the month, the fastest increase since May and up from August’s 0.3%.

Gasoline was a major driver. Oil remained above $100 per barrel following renewed Middle East violence; before the Iran war, it had been below $70. The nationwide average for gasoline was about $4.25 per gallon. Costs also climbed for shipping, utilities and hotel stays. Core inflation, which removes food and energy, reached 3.1% over the year, after 3% in August. It increased 0.3% from August to September.

The broader economy expanded at a 3.4% annual pace during the July-September quarter, versus 2.2% in April-June. Consumer spending grew at a 3.8% annual rate, though inflation-adjusted after-tax income dropped 0.3% in September. Households were drawing on savings or credit to support spending. For Spokane residents, higher fuel and utility costs can squeeze household budgets, while elevated borrowing costs can affect major purchases. The Federal Reserve kept its main interest rate steady, but persistent inflation and strong growth increased the likelihood of a rate hike at its December meeting.