Market Analysis • November 04, 2025
Gasoline Stole the Headline, Services Kept the Heat: September CPI’s Quiet Re-acceleration
StoneFlare Analyst••CPI
On 2025-10-24, the September CPI press release led with a friendly headline: +0.3% MoM, “cooler” than August’s +0.4%, with gasoline (+4.1% MoM) billed as the main culprit. That’s technically true—and strategically incomplete. The underreported pivot: headline inflation accelerated to 3.0% YoY from 2.9%, powered by a rebound in energy to 2.8% YoY and stubborn services pressure. Core eased, but the backbone of inflation—services and shelter—still runs hotter than the overall index.
- Headline CPI cooled MoM (+0.3%) but re-accelerated YoY to 3.0% (from 2.9%), a detail the narrative downplays.
- Core CPI softened to 0.2% MoM and 3.0% YoY, yet services less energy services hold at 3.5% YoY and shelter at 3.6% YoY, both above headline.
- Energy rose 1.5% MoM on gasoline, while electricity (-0.5% MoM) and natural gas (-1.2% MoM) fell—yet YoY, electricity +5.1% and natural gas +11.7% remain a cost burden.
- The release spotlights OER +0.1% MoM (smallest since Jan 2021), but shelter still +0.2% MoM and 3.6% YoY—hardly benign.
- Declines in used cars (-0.4% MoM) and motor vehicle insurance (-0.4% MoM) are narrow; used cars remain +5.1% YoY.
The Numbers at a Glance
| Category | Sep MoM | Aug MoM | Sep YoY | Aug YoY | Note |
|---|---|---|---|---|---|
| Headline CPI | 0.3% | 0.4% | 3.0% | 2.9% | YoY ticked up |
| Core CPI | 0.2% | 0.3% | 3.0% | 3.1% | Cooling, but still sticky |
| Services ex energy services | 0.2% | 0.3% | 3.5% | 3.6% | Above headline |
| Shelter | 0.2% | 0.4% | 3.6% | 3.6% | Still elevated |
| Owners’ equivalent rent (OER) | 0.1% | — | — | — | Smallest since Jan 2021 |
| Energy | 1.5% | 0.7% | 2.8% | 0.2% | YoY re-acceleration |
| Gasoline | 4.1% | — | -0.5% | -6.6% | Less negative YoY |
| Electricity | -0.5% | — | 5.1% | 6.2% | Elevated YoY level |
| Natural gas | -1.2% | — | 11.7% | 13.8% | Elevated YoY level |
| Food | 0.2% | 0.5% | 3.1% | 3.2% | Decelerating |
| Transportation services | 0.3% | 1.0% | 2.5% | 3.5% | Cooling MoM |
| Airline fares | 2.7% | 5.9% | — | — | Still elevated momentum |
| Used cars and trucks | -0.4% | 1.0% | 5.1% | 6.0% | YoY still firm |
| Motor vehicle insurance | -0.4% | — | — | — | One-month relief |
| Medical care | 0.2% | -0.2% | 3.3% | — | Stabilizing higher |
The MoM Cooldown That Wasn’t
The headline story—“cooler MoM”—is fair but partial. YoY inflation rose to 3.0%, and that matters more for policy and pricing power. The driver isn’t just gasoline’s pop; it’s the energy complex’s YoY rebound to 2.8%, reversing months of drag. The relief in electricity (-0.5% MoM) and natural gas (-1.2% MoM) didn’t dent the YoY pressure of 5.1% and 11.7%, respectively. Utilities costs remain a tax on margins.
Services: The Stubborn Backbone
Yes, core slowed to 0.2% MoM, but services less energy services still run 3.5% YoY, and shelter sits at 3.6%—both above the overall 3.0%. The press release touted OER +0.1% (a genuine milestone), yet shelter overall +0.2% MoM and lodging away from home +1.3% confirm services aren’t capitulating. This is the inflation that sticks to P&Ls.
Energy’s Optics vs Reality
Gasoline +4.1% MoM made the headline, but the quiet story is the YoY acceleration in energy: 2.8% vs 0.2% in August. Meanwhile electricity +5.1% YoY and natural gas +11.7% YoY squeeze households and energy-exposed corporates. The narrative focused on monthly relief; the data show structural YoY cost pressure remains.
“Offsetting Declines” Are Narrow
The release highlighted used cars (-0.4% MoM), motor vehicle insurance (-0.4% MoM), and communication (-0.2% MoM). Useful, but narrow. Used cars remain +5.1% YoY, apparel +0.7% MoM, household furnishings +0.4% MoM, and airline fares +2.7% MoM suggest broad, if slower, price firming. This is not a clean disinflation print.
Narrative Drift, Not Data Drift
Between the August release (2025-10-20) and September (2025-10-24), the tone pivoted—from shelter-led firmness to gasoline-led headlines and an OER victory lap. The data did cool at the margin—core 0.3% to 0.2%, shelter 0.4% to 0.2%, transport services 1.0% to 0.3%—but the YoY headline ticked up, and services/shelter stayed above headline. No revisions were disclosed; this is purely narrative emphasis.
Looking Ahead
- Watch the pipeline: Will shelter keep decelerating from 0.4% to 0.2% MoM, or does lodging/seasonality re-firm?
- Services ex energy services at 3.5% YoY is the policy pivot point; further progress is requisite for a true disinflation narrative.
- Energy base effects: With gasoline YoY at -0.5% (from -6.6%), headline risks skew upside if crude holds.
- Autos: Used cars -0.4% MoM is helpful, but +5.1% YoY says don’t over-read one month. Auction data and inventory rebuilds are key.
- Policy signaling: The emphasis on MoM cooling and OER softness suggests a communication tilt toward calm; the hard numbers argue for cautious patience rather than victory laps.