The core CPI miss was driven by broad advances beyond energy, with core goods rising 0.25% on the month, the largest gain since January 2025, and shelter climbing 0.39%. Core services excluding housing rose 0.42% in September, pushing the three month annualized supercore rate to 4.6% from 1% in July. Following the release, TD Securities raised its monthly core PCE inflation forecast to 0.36% from 0.23%, with Wall Street consensus expected to move to at least 0.3% from 0.21% due to gains in housing, apparel, education, vehicles and recreation.
White House Senior Adviser Kevin Hassett said the "top line inflation number was disappointing" after headline CPI rose 0.6% from August and 3.7% from a year earlier, extending inflation's run above the Fed's 2% target to 66 consecutive months. While dairy fell 0.9% and the meat, poultry, fish and eggs category declined 0.5% on the month, the broader price increases eroded paychecks, with real average hourly earnings falling 0.7% from a year earlier for a sixth consecutive decline and real average weekly earnings slipping 0.1%.