Why Inflation Hit 3.7% and What Warsh's Fed Said, Explained
September 2026 inflation in the US was 3.7%, the rise in the consumer price index over the 12 months to September, up from 3.4% in August. Gasoline, up 34.2% over the year, drove more than half of the month's increase, the Bureau of Labor Statistics reported on 14 October 2026.
September 2026 inflation reached 3.7%, the highest 12-month rate for US consumer prices since May 2026, when it was 4.2%. Most of the jump from August came from gasoline, while prices outside food and energy rose more slowly.
This page sets out what the official September report showed, where the 3.7% came from by our own breakdown of the Bureau of Labor Statistics data, what the Fed itself has said, and what it means for savings and loans. It reports the data and both sides of the rate debate and makes no forecast.
What the September report showed
The headline. The all-items index for urban consumers rose 3.7% in the 12 months to September 2026, up from 3.4% in August, the Bureau of Labor Statistics reported on 14 October. After seasonal adjustment, prices rose 0.6% in September alone, after 0.4% in August. FRED’s copy of the same series gives the same figures, and CBS News reported the 3.7% that morning.
Gasoline led. The gasoline index rose 9.1% in September and 34.2% over the year. In the bureau’s words it accounted for “over half” of the monthly all-items increase, which CBS News also reported. The energy index as a whole was up 20.4% on the year.
Shelter kept rising. Shelter, which covers rent and the rent owners would pay for their own homes, rose 0.4% in the month and 3.2% over the year. Rent of a primary residence was up 2.8%.
Groceries eased. Food at home fell 0.1% in September and was up 1.8% on the year, slower than prices overall. Food away from home rose 3.5% over the year.
Core inflation. Prices excluding food and energy rose 0.3% in September and 2.6% over the year, up from 2.4% in August.
Other moves. Over the 12 months, fuel oil rose 74.2%, airline fares 22.4%, electricity 4.4% and piped natural gas 5.0%, while motor vehicle insurance fell 5.0% and used cars and trucks 1.5%. Each figure is in the bureau’s release and in its own data series, which we downloaded.
How it works: what the index weighs
The index follows the prices of a set basket of goods and services, each one weighted by how much households spend on it. The bureau’s Table 1 lists those weights as “relative importance.” In August 2026, shelter was 35.3% of the index, food 13.5% and energy 7.4%, with gasoline alone at 3.9%. Items other than food and energy made up 79.1%.
That weighting explains the month. A 9.1% jump in an item worth about 4% of the basket moves the total about two and a half times as much as a 0.4% rise in an item worth 35%.
Two versions of each number. The 12-month figures are calculated from the index before seasonal adjustment; the one-month figures use the seasonally adjusted index. That is why the bureau’s headline pairs 0.6% for the month with 3.7% for the year.
A gap in the record. The bureau published no index for October 2025, and FRED’s series show that month as blank. The September figures are not affected.
The original data
We downloaded the index from FRED and from the bureau’s data service, checked that the two match to the third decimal, and calculated every 12-month change ourselves from January 2022 to September 2026.
Our unrounded results are 3.738% for all items and 2.564% for core in September 2026, against 3.397% and 2.446% in August. The bureau rounds them to 3.7%, 2.6%, 3.4% and 2.4%. On the same calculation the all-items rate peaked at 9.1% in June 2022, and its low point since then was 2.3% in April 2025.
The second chart splits the 3.7% into parts. For each part we took the bureau’s August 2026 weight, carried it back to September 2025 using how far that item’s price moved compared with the whole index, and multiplied it by the item’s 12-month change. That is our estimate, not a bureau figure, because the bureau updates its weights each year.
Gasoline added about 1.08 percentage points and shelter about 1.14. The parts sum to 3.73 points, close to the 3.74% total, which is a check on the method. On that basis gasoline was about 29% of the year’s rise, and energy as a whole about 1.35 points, or 36%.
The same data shows how unsteady gasoline has been in 2026. After seasonal adjustment, its index rose 21.2% in March, fell 9.7% in June and 2.9% in July, then rose 3.9% in August and 9.1% in September.
What the Fed has said
The September decision. On 16 September 2026 the Federal Open Market Committee raised its target range for the federal funds rate by a quarter point to 3.75% to 4%, by a 12 to 0 vote. Its statement says “Inflation remains elevated” and that the action “will support a timelier return to the Committee’s 2 percent goal.”
The first rise since 2023. FRED’s record of the target range shows the last increase before that on 27 July 2023. AP and Newsweek both describe the September move as the first since 2023.
The chair’s words. Kevin Warsh, Fed chair since he was sworn in on 22 May 2026, said at his press conference that “inflation is too high and has been for too long,” as AP and Newsweek both reported.
What comes next. The Fed’s calendar lists the next meeting on 27 and 28 October, and CBS News gives the same dates. The Fed’s September projections put the median federal funds rate at 4.1% at the end of 2026, one more quarter-point rise, as AP and Newsweek reported; CBS News also says officials signaled another increase this year. The next price report is due on 10 November, per the bureau’s release and its published release schedule.
A worked example: savings against 3.7%
Take a hypothetical $10,000 in a savings account paying 3% a year.
- After a year. The balance grows to $10,300.
- What prices did. Over the same 12 months, prices rose 3.7%.
- What the balance buys. $10,300 divided by 1.037 is about $9,932.50 in last year’s prices.
- The gap. Measured in buying power, the saver is about 0.68% worse off, even though the balance rose by $300.
That gap, the interest rate minus inflation, is the real return. The real return calculator runs the same sum over several years.
The case for another hike and the case for waiting
For raising again. Prices rose faster in September than in August, and core inflation rose too, staying above the 2% goal. Supporters of a hike argue that waiting lets higher prices settle into wages and rents. The Fed’s own statement says inflation “remains elevated.”
For waiting. Those who favor a pause point out that most of the jump came from energy, and a rate rise does not make gasoline cheaper. Gasoline fell sharply in June, as the data above shows, and food at home fell in September. They also argue that the September increase has had only a few weeks to work.
What markets did. In the Treasury’s daily rates, the 2-year yield closed at 4.82% on 14 October, up from 4.79% the day before, while the 10-year closed at 5.19%, down from 5.21%. FRED’s copies of the two series show the same closes.
What it means for you
Savings. Compare your savings rate with 3.7%. A shortfall of less than one point a year sounds small, and the inflation and savings page works through how it builds over decades.
Loans with a rate that can change. AP noted after the September decision that a higher Fed rate can, over time, raise borrowing costs on mortgages, auto loans and credit cards. Our interest rate page explains how a lender sets the rate on top of it.
Social Security. The Social Security Administration announced on 14 October a 3.6% increase for 2027, starting with January payments, the largest since 2023, as Fox Business and HousingWire both reported. The rule uses the third-quarter average of a different index, the CPI-W. From the bureau’s data, that average was 328.746 in 2026 against 317.265 in 2025, a rise of 3.62%, which rounds to the announced 3.6%.
Where you live. Over the year, prices rose 4.2% in both the Northeast and the Midwest, and 3.4% in the South and the West, in the bureau’s regional indexes.
Fuel at home. Households that heat with oil face the biggest jump among the items in the bureau’s Table 1: 74.2% in a year.
When it fails: limits of these figures
One basket, one average household. The index weights reflect average spending. A renter with a long commute and a homeowner who works from home see very different inflation. The consumer price index page covers why no one household matches it.
Our split is an estimate. The contributions use weights carried back from August 2026 across the yearly weight update, so each part could be off by a few hundredths of a point.
One month is noisy. Gasoline moved by more than 9% in either direction in three months of 2026. A single report can swing on one item.
Rounding hides ties. The Northeast and the Midwest both round to 4.2%; unrounded, the Midwest is a little higher at 4.238% against 4.224%.
The Fed’s next step is not known. Officials’ September projections are not a promise, and new data arrives before the October meeting.
Related
Start with the consumer price index page for how the basket is built and what it leaves out. For how rising prices erode cash over years, read what inflation does to savings, and for how the Fed’s rate passes into the loans you hold, see interest rate.
Compare the rate your savings earn with the latest 12-month inflation figure. If the savings rate is lower, your balance is losing buying power even while it grows, so check whether a higher-paying account you can still reach easily is available.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.