Economic Report: U.S. inflation surges again after hurricane boosts gas prices, CPI shows

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Consumers prices rose sharply in September for the second straight month, but inflation generally remains quite low.

The numbers: The consumer price index rose 0.5% in September, the second big increase in a row and the largest in eight months. Economists polled by MarketWatch had forecast a 0.6% gain owing to higher gasoline prices.

If food and energy are stripped out, core CPI rose a much smaller 0.1%.

The recent energy-driven rise in CPI pushed the yearly rate of inflation to 2.2% from 1.9% to match a six-month high. The more closely followed core rate, however, was unchanged at 1.7% for the fifth month in a row.

Adjusted for inflation, hourly wages fell 0.1% and were down for the second consecutive month. Over the past year “real” wages have risen just 0.7%.

What happened: Three-fourths of the increase in the cost of living last month stemmed from higher prices at the gas pump. Hurricane Harvey knocked major refineries off line to force gas dealers to scramble for supplies.

The cost of housing, car insurance and wireless phone service rose in September. Prices for medical care, clothes and new and used cars fell.

The big picture: The mini-surge in inflation since August largely reflects higher energy prices, but they already started to decline as refineries get back in business. By and large, inflation is still quite mild, indeed surprisingly so.

Still, many senior Federal Reserve officials are convinced inflation will move higher in the next six months owing to a tight U.S. labor market and a strengthening global economy. The U.S. unemployment rate, for instance, is at a nearly 17-year low of 4.2%.

At the very least, the recent rise in inflation is likely to keep the Fed on track to raise a key U.S. interest rate in December.

Market reaction: The Dow Jones Industrial Average

DJIA, -0.14%

  and the S&P 500 index

SPX, -0.17%

  were set to open higher in Friday trades.