The U.S. Consumer Price Index (CPI) report, set to be released on Wednesday, shows that the inflation rate is decreasing in September despite high oil prices. Economists predict that the inflation rate for this month will increase by 0.5 percent compared to last month and 3.6 to 3.7 percent compared to last year, while this rate was 0.4 percent and 3.4 percent in August, respectively.
Core Inflation Rate and Its Effects
It is also expected that the core inflation rate, which excludes volatile energy and food prices, will increase by 0.2 percent in September, down from 0.3 percent in August. The annual core inflation rate will remain at 2.4 percent. These changes allow the Federal Reserve to act more cautiously regarding interest rate hikes.
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According to reports, the likelihood of an interest rate hike by the Federal Reserve at the upcoming meeting on October 27 and 28 has decreased to about 19 to 20 percent, significantly down from over 70 percent in late September. Jeffrey Schulz, Chief Investment Strategist at Franklin Templeton, notes that supply shocks caused by oil supply disruptions and rising prices of consumer goods related to artificial intelligence have exacerbated this situation.
Impact of Oil Prices on Other Markets
While the overall inflation rate well reflects the impact of crude oil prices, economists believe that other major categories of inflation are currently unaffected, and there is no evidence of pass-through pricing. Airline ticket prices have been significantly affected by rising energy prices, with increases of over 2 percent in July and August and a 25 percent increase compared to last year. Fuel costs account for nearly 17 to 21 percent of an airline's total operating expenses, making ticket prices highly sensitive to fluctuations in oil prices.
While oil prices are currently at a high level, Brent crude for December delivery fell by 2 percent to $104.60 per barrel, and West Texas Intermediate crude also decreased to $91.89 per barrel. The average gasoline price in the U.S. reached $4.3413 per gallon on Tuesday, down from a month ago, but still higher than about $2.98 before the war began in early February.
Diesel prices have remained stable despite limited fluctuations, currently averaging $6.2787 per gallon. Meanwhile, U.S. President Donald Trump has signed an agreement with Russian President Vladimir Putin to supply Russian diesel to U.S. and global markets to reduce fuel prices. Russia has committed to immediately supply over 300,000 tons, equivalent to 2.25 million barrels of diesel, with another 500,000 tons planned for delivery in November 2026.
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