Inflation rose to a 2.2 percent annual rate in September, the Bureau of Labor Statistics reported Friday, thanks to a spike in gasoline prices driven by hurricane disruption.
Gas prices rose 13 percent in the month and accounted for three-fourths of the total monthly increase in inflation, according to the agency. On the year, energy prices are up roughly 20 percent.
Forecasters had expected that the damage to energy infrastructure caused by Hurricanes Harvey, Irma, and Maria would push inflation in the Consumer Price Index up from its prior rate of 1.9 percent in August.
With Friday's report, the Social Security Administration announced that monthly benefits for retirees and disabled people would get a 2 percent cost-of-living adjustment in 2018, a change that will affect 66 million people.
Rising inflation is welcome from the perspective of the Federal Reserve, which has been surprised by inflation running below its target for most of the year. The central bank targets 2 percent inflation, although it uses a different gauge than the Consumer Price Index.
Nevertheless, Friday's report is a mixed bag. Although it shows inflation rising, much of that increase is clearly attributable to supply-side factors such as problems in gasoline distribution. There are fewer signs of what the Fed wants to see, namely broad-based economic health putting upward pressures on prices.
Core inflation, which strips out food and energy prices, held at just 1.7 percent for the fifth month in a row.
"The data hurt the case for another Fed rate hike as soon as December, although we still think such a hike is more likely than not," wrote Jim O'Sullivan, chief U.S. economist for High Frequency Economics.
Higher inflation means that dollars don't go as far. For example, drivers all around the country saw more of their paychecks go to gas purchases during September.
Nevertheless, the Fed wants to see inflation rise durably to 2 percent not for its own sake, but as a sign that the economy is running at full strength. Inflation has mostly run below its target for the past five years.
The question of why inflation is running so low even as the economy has recovered to near full employment is one that has vexed Chairwoman Janet Yellen and other members of the central bank. Officials debated that question at their September monetary policy meeting, minutes from the gathering show. Many of them believe that "cyclical pressures," such as falling unemployment, will yield rising inflation in the months ahead, according to the minutes. Some, however, aren't convinced that prices will rise even as the Fed raises rates.
Over the past year, a handful of different factors have played into low core inflation.
Medical care prices have risen just 1.6 percent, the smallest such increase since 1965.
And, setting aside fuel prices, transportation costs have dropped 1.8 percent, the biggest such decrease on record.