Inflation Ticks Up on Higher Gas Prices: What It Means for Your Investments

Inflation ticks up, driven by higher gas prices. What does it mean for your investments? That’s the subject of this week’s Fastest 4 Minutes in Finance.

September Inflation Data: Not Alarming, But Concerning

September inflation data was released this week, and while the numbers were not alarming, or that surprising, they are concerning. I’ll explain that in a minute. But, first, let’s go over the numbers.

Consumer Price Index (CPI) Rises 3.7% as Gas Prices Hit Record High

The Consumer Price Index was up 3.7% year-over-year in September. That’s higher than 3.4% in August. Prices were also up .6% just from the previous month. Gas prices were the main reason. They jumped 9.1% since August, as prices at the pump hit a record high in September. The national average was $4.33 per gallon.

Core Inflation: Travel, Hotel, and Car Rental Costs Drive Increase

Core inflation, which strips out food and energy prices and is watched more closely by the Federal Reserve was up 2.6% compared to September, 2025. Travel and leisure prices drove much of the increase. Car rental costs rose 5.4% month-over-month, hotels were up 2.3%, and tickets to sporting events climbed 7.6%.

Will the Fed Raise Interest Rates in October?

The inflation data increased the expectation that the Fed will raise interest rates again in October. Those odds are now sitting at 50-50.

Seema Shah, chief global strategist at Principal Asset Management told Yahoo Finance that the data reinforces the view that inflation remains too persistent for the Fed to declare victory.

Why Persistent Inflation Is Heading in the Wrong Direction

That brings us back to why the numbers are concerning. The concern is that a trend is emerging again. Shah points out that more than half of the economic areas measured by the CPI are still running at a pace above 3%. While it’s nothing like the price surges we experienced in 2021, it’s headed in the wrong direction again.

Inflation, Interest Rates, and the Stock Market: Should You Change Your Investments?

At the same time, the carry-over of higher inflation, and potentially even higher interest rates, should not tempt you to make a change to your investments. The stock market is not directly correlated to either. Underlying fundamentals of American companies, especially of the larger companies that make up the S&P 500 Index are still strong. As we told you earlier this month, those companies are on track for more than 30% earnings growth in 2026.

Recession Risk: What Could Really Impact the Stock Market

What would impact the stock market is a recession. And certainly sustained high inflation and interest rates could lead us there. Which is why a trend would be troubling.

Building an All-Weather Financial Plan Through Diversification and Time Horizon

But, it’s never time to panic, especially if you have a plan. Your financial plan should be all-weather, meaning it is prepared to sustain any market condition. You build it through diversification and time horizon. Your stock investments should be set for the long term. Anything you need to sell in the next decade, whether for retirement income or a major purchase, should be invested in a more conservative strategy. And the upside is that your more conservative investments could benefit from higher interest rates.

Bottom Line: Avoid Emotional Investing

Bottom line: while the inflation data wasn’t great, you shouldn’t let it scare you. Emotional investing is one of the best ways to make your plan fail.

Securities are offered through LPL Financial, Member FINRA/SIPC. GenWealth Financial Advisors is an other business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance, LLC, a registered investment adviser. Independent Advisor Alliance, LLC is a separate entity from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.