US consumer prices rose 3.2% in the 12 months to September 2026, down from 3.4% in August, according to the Bureau of Labor Statistics, which released the data on 14 October. The decline was driven by a meaningful further easing in shelter inflation — the category that has most stubbornly held headline CPI above the Federal Reserve's 2% target.
Shelter finally moving
Shelter inflation — which includes rent and owners' equivalent rent and carries a roughly 36% weight in CPI-U — came in at 4.6%, down from 5.0% in August and well below the 8%+ peak of 2023. Economists had long anticipated this decline as new lease contracts, signed at lower rents, gradually work their way into the BLS's measurement methodology. That process appears to be accelerating. If shelter continues its current trajectory, it could approach 3% by mid-2027 — which alone would push core CPI close to 2%.
Core at its lowest since 2021
Core CPI — the 12-month rate excluding food and energy — fell to 2.2%, its lowest reading since early 2021. Goods deflation continued: used cars and trucks, apparel, and household furnishings all declined on the month. Services inflation outside of shelter eased to around 3%. The BLS detailed CPI tables show broad-based moderation across most basket categories.
What the Fed will make of this
The Federal Reserve targets 2% inflation using the PCE price index, not CPI. Core PCE — which the Fed watches most closely — typically runs 0.3–0.5 percentage points below core CPI. If that pattern holds, September's core PCE would be approximately 1.7–1.9% — within striking distance of target. The BEA will publish September PCE data in late October. The FOMC's next rate decision follows on 5 November.
For context on how today's data fits into the longer trend, you can chart the full US CPI history using our live inflation explorer. The cross-country picture — including euro-area and UK readings — is covered in our August cross-country analysis.