Gas price increases eased in September from the previous month, a positive sign for the Federal Reserve in its battle against inflation.
The gasoline index increased 2.1% in September, a slowdown from the 10.6% month-over-month rise in August. On a year-over-year basis, gasoline prices rose 3% in September.
The national retail average for gasoline reached a 2023 high of $3.88 per gallon on Sept. 18. Yet prices have been retreating since then.
As of Thursday, drivers at the pump were paying a national average of $3.65 per gallon, though Western states saw higher amounts. The average in California was $5.70, according to AAA.
While the Federal Reserve is focused on bringing down "core" inflation, which excludes more volatile categories of food and energy, economists have been concerned that rising energy costs could drive that metric higher because of rising input costs for companies. For instance, rising fuel costs could prompt airlines to raise the fares they charge consumers.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
September's increase in gas prices was still a “major contributor” to September's inflation print, according to the Bureau of Labor Statistics. Overall, the Consumer Price Index rose 0.4% on a monthly basis, a slowdown from the month-over-month 0.6% registered in August.
The all-items index increased 3.7% annually, hotter than the 3.6% anticipated by economists surveyed by Bloomberg but in line with the prior month's reading.
The CPI's energy index has been volatile on a month-over-month basis as oil jumped an average of about 28% in the third quarter of this year. Output cuts by OPEC+, the world's largest oil producers and their allies, along with unilateral reductions from Saudi Arabia, helped elevate oil prices.
On Sept. 27, crude reached a 2023 high with West Texas Intermediate (CL=F) surpassing $93 per barrel and Brent International (BZ=F) futures rising above $96 per barrel.
Prices have pulled back since then. On Thursday, WTI futures traded above $84 per barrel while Brent hovered above $87.
On Monday oil surged more than 4% following a surprise attack on Israel by the Palestinian Islamist group Hamas, fueling worries of broader conflict breaking out in the Middle East region.
Read more inflation coverage:
Inflation: Consumer prices rose 3.7% over last year in September, matching August's increase
Stock open flat as CPI inflation holds steady: Stock market news today
Fed can stay 'patient' after inflation data as odds rise on a December rate hike
Housing costs again frustrate the Fed’s efforts to curb inflation
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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