Inflation sizzled in September — and Social Security benefits will get a boost

Rising gasoline and diesel prices pushed inflation higher in September. The cost of living index was up 3.7%, according to a report Wednesday from the Labor Department. Isabelle Souriment/Hans Lucas/AFP via Getty Images hide caption

A report from the Labor Department on Wednesday showed consumer prices in September were up 3.7% from a year ago. That's a larger annual increase than the previous month.

A spike in energy prices tied to the U.S. war with Iran drove the cost of living higher. Prices jumped 0.6% between August and September.

"It's not looking good," said economist Brian Bethune of Boston College. "The main problem, of course, that everybody knows is gasoline prices. But also heating oil."

Heating oil is a close cousin of diesel fuel. The cost of the fuel oil has jumped 74% in the last year, which is hard on families in New England who rely on heating oil to stay warm.

Stripping out volatile energy and food prices, what's known as "core inflation" was 2.6% in September. That's also a bigger annual increase than was tallied in August.

The artificial intelligence boom has raised the cost of memory chips, affecting all sorts of consumer electronics. Apple, for example, raised the price of older-model iPhones last month by $100 apiece.

Shortly after the inflation report was released, the Social Security Administration announced that benefits will increase by 3.6% next year . The annual cost-of-living adjustment is based on prices in July, August and September.