- Fuel costs likely drove headline rate higher
- Core inflation seen easing in September
- Fed divided on timing of next hike
- Data due at 08:30 EST/12:30 GMT

By Harry Daniels
LiveSquawk News
@HarryDaniels71

18:00 GMT | 13 October 2026

Stronger-than-expected US inflation data could increase pressure on Federal Reserve officials to raise interest rates again ahead of the midterm elections. However, recent comments from senior policymakers suggest the bar for an October hike remains high.

The latest economists’ poll forecasts headline CPI to rise 0.6% m/m in September, two tenths faster than in August, with the annual rate accelerating to 3.6% from 3.4%.

Rising gasoline prices are expected to be the principal driver of higher headline inflation, while underlying monthly price pressures are forecast to moderate.

Analysts at Oxford Economics said a near 10% jump in motor fuel prices would account for much of the increase in headline CPI. They also expect slightly firmer food inflation, with price pressures likely to build through H1 2027 following the latest rise in diesel costs.

Core CPI, which excludes food and energy, is expected to ease to 0.2% m/m in September from 0.3% in August. However, the annual rate is forecast to edge higher to 2.5% from 2.4%.

Morgan Stanley’s Diego Anzoategui expects core services inflation to slow, largely reflecting a normalisation in communication services following August’s one-off increase in wireless telephone fees.

“We forecast still-positive core goods inflation, driven by higher vehicle prices and ongoing, albeit modest, pressure from AI-related demand,” he said.

Comments from Federal Reserve officials since the 15–16 September FOMC meeting have been broadly hawkish, although policymakers remain divided over the urgency of further tightening.

Prominent officials, including New York Fed President John Williams and Governor Christopher Waller, have acknowledged the case for additional rate increases but urged caution over their timing and frequency.

Speaking this week, Williams said one further rate hike would likely be appropriate this year, adding, “I still believe disinflationary forces are at play.”

Cleveland Fed President Beth Hammack favoured smaller policy adjustments delivered relatively quickly, while stressing that future decisions would remain dependent on incoming data.

“Policy stance is explicitly conditional rather than preset,” she said. “If inflation remains elevated relative to forecast, there’s potential for tighter policy.”

Oxford Economics noted that the minutes from September’s FOMC meeting, alongside recent comments from policymakers, left little doubt that further tightening was coming, potentially involving more than one increase. The main uncertainty, it said, was the timing of the next move.

“The Fed is focused on whether higher energy prices are bleeding into a broader range of consumer prices,” the consultancy's economists said.

“While we expect the central bank to hike in October, a 0.2% increase in the core CPI, as we've forecasted, would make it a much closer call.”