Gasoline, diesel, AI build-out and tariffs push US inflation higher

what happened

Gasoline accounted for more than half of the increase in US inflation in September, according to MarketWatch's review of the consumer price index report released on Wednesday. Gasoline prices rose 9.1% from August, compared with a 3.9% gain the month before, and were up 34% over the past year.

The effect is spreading. CIBC Economics noted that transportation services, partly tied to fuel costs, rose 0.6% over the month. Helen Lao of CIBC pointed to notable increases in car and truck rental, airline fares and intracity transport. Barclays analysts warned that elevated diesel prices, which averaged about $6.30 a gallon according to AAA versus $3.66 a year earlier, are unlikely to stay confined to energy items, since diesel fuels the movement of goods across the economy.

Another driver is the construction of data centers for artificial intelligence. Information technology commodities rose 0.9% in September, and computer peripherals increased 1.3% on the month and 9.2% from a year earlier, according to RSM's Joseph Brusuelas. Chicago Fed President Austan Goolsbee told Semafor that AI-related inflation is 'jumping out of its lane.' Tariffs also contribute: a New York Fed analysis found they added 2.9 percentage points to goods price inflation by February 2026.

why it matters

Higher energy costs, AI-related demand and tariffs are moving into a wider range of goods and services, which keeps the Federal Reserve focused on persistent inflation. According to RBC Economics, imported toys and other recreational goods posted their largest monthly changes on record in the latest CPI report.

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