US inflation jumps to 3.7% in September as petrol rises 9.1%; Social Security COLA set at 3.6% for 2027

US consumer prices rose 3.7% in the year to September 2026, up from 3.4% in August and above the 3.6% economists had forecast, the Labor Department said on Wednesday, with petrol doing most of the damage. The same morning the Social Security Administration set the 2027 cost-of-living adjustment (COLA) at 3.6%, up from 2.8% this year, CBS News reported.

The numbers

• Headline CPI: 3.7% a year, from 3.4% in August, which had itself held at that pace for two months.
• Core CPI (without food and energy): 2.6%, from 2.4%, against a 2.5% forecast.
• Petrol (gasoline): up 9.1% in a single month and 34.2% on a year. It accounted for more than half of September's rise, CBS News reported.
• Energy overall: up 20.4% on a year.
• At the pump: the AAA national average was $4.33 a gallon on Wednesday, against $2.98 before the current Middle East war began. Diesel hit a record $6.29 a gallon in late September.

"The CPI was clearly hot, and there aren't many ways to sugarcoat it," Adam Crisafulli of Vital Knowledge wrote to investors, adding that energy costs are "starting to seep into the broader economy."

Social Security: 3.6% more from early 2027

The COLA is set each October from inflation data and applies to more than 75 million Americans, including retirees, disabled workers and survivors. A 3.6% rise is larger than this year's 2.8% but, with headline inflation now at 3.7%, it only just keeps pace. Pakistani-American retirees and families in Pakistan who receive part of a US pension will see the higher payments from early next year.

Why it matters in Pakistan

Hot US inflation makes the Federal Reserve less likely to cut rates; one Fed official, Beth Hammack, said this week rates may even need to rise. Higher US rates tend to lift the dollar and weigh on gold and crypto:

• Bitcoin fell sharply after the data, CoinDesk reported. Our Bitcoin page shows $82,420 today against $83,216 on Tuesday.
• Gold in Pakistan is lower today: 24-carat at Rs 424,945 a tola against Rs 431,953 on Tuesday on our gold rate page.
• The dollar is at Rs 277.05 in the interbank market (dollar rate today).

For families receiving dollars from the US, the currency converter works out what a transfer is worth in rupees at today's rate.

What comes next

US voters go to the polls in the 3 November midterm elections with prices at the top of their concerns: nine in ten Americans say prices are the most important factor in how they judge the economy, a CBS News poll found. The Fed's next decision will be read closely in Karachi's markets too, because a stronger dollar raises the rupee cost of oil imports.