White House economic adviser Kevin Hassett said September's jump in U.S. inflation largely reflected a "temporary" surge in energy prices, arguing that stable food costs and falling prescription-drug prices offered encouraging signs beneath the hotter headline number.

Hassett Finds Good News Beneath Inflation

Speaking to NewsNation at the White House Wednesday, the National Economic Council director acknowledged a "surge in energy prices" but called it "temporary." "But there's a whole bunch of good news in the report," Hassett said.

The Consumer Price Index rose 0.6% in September and 3.7% from a year earlier, accelerating from 3.4% in August. Gasoline jumped 9.1% in one month and accounted for more than half of the monthly CPI increase, while the broader energy index climbed 5.2% monthly and 20.4% annually, the Bureau of Labor Statistics said. The hotter print also revived expectations that the Federal Reserve could keep raising rates.

Hassett pointed to food and medicine as offsets. Food prices were unchanged in September, grocery prices slipped 0.1%, and prescription-drug prices fell 1.2%. "My expectation is that the strength of all the things that we've been doing in terms of getting food prices down and getting drug prices down, that strength is going to motor through," he said.

Energy Shock Drives Broader Price Pressures

Energy nevertheless dominated the report. Gasoline prices surged as the U.S.-Israeli war with Iran disrupted energy markets, while other motor fuels, including diesel, rose 11.9% in September and 60.9% from a year earlier. The Iran conflict had already pushed gasoline above $4 and diesel above $6 in September, fueling warnings that the energy shock could keep inflation elevated.

Underlying inflation also strengthened. Core CPI, excluding food and energy, rose 0.3% for the month and 2.6% annually, up from 2.4% in August. Reuters noted increases in shelter, airline fares, services and several goods categories, suggesting price pressure extended beyond fuel.

The data also showed consumers losing purchasing power. Real average hourly earnings fell 0.5% from August and 0.7% from a year earlier as inflation outpaced wage gains.

Energy-linked ETFs were also under pressure heading into Thursday's session. The United States Natural Gas Fund LP (NYSE:UNG) was trading at $11.19 in overnight trading after falling 1.67% to $11.22 on Wednesday, while the United States Gasoline Fund LP (NYSE:UGA) closed 0.12% lower at $145.97.

White House Sees Temporary Energy Hit

The White House has argued that the Iran-driven energy shock will fade. Trump has repeatedly said higher fuel prices represent a temporary cost of preventing Iran from developing nuclear weapons, previously calling the increase "peanuts" compared with that objective.

Still, economists remain cautious. Reuters quoted AllianceBernstein chief U.S. economist Eric Winograd on Wednesday, saying there was "no reason to expect" the lost purchasing power from higher energy costs "to fade in the near term."