Inflation worsened in September. Blame energy prices — mostly

​Inflation worsened in September.

According to the consumer price index report released on Wednesday, prices increased 3.7% from last year. That’s up from a 3.4% increase in August.

Of course, energy prices are the main culprit here, thanks to the ongoing war in Iran. But if energy prices are a dumpster fire in the economy, it would be nice to know if it’s going to spread.

The best way to tell that is to look how other areas are doing — like services.

“Services inflation is just not dampening down at all,” said Omair Sharif, founder of Inflation Insights.

So, there are areas of mild concern around the dumpster.

“Recreation services were relatively strong today,” Sharif said. “Hotel rates have moved up sharply the last few months. Air fares are still rising as airlines try to recoup jet fuel costs.”

Still, other prices have come down — like beef, pork, milk.

The government measures inflation across goods and services, and tracks when it is below 2% or above it. People notice the latter much more than the former.

“[But] right now, it’s about a 50-50 split,” said Eric Winograd, director of developed market research at AllianceBernstein.

That means the dumpster fire is not spreading much.

“The truth is, the second-round effects, or the knock-on effects from oil into other prices have been a lot more limited than I think most people would have expected,” Winograd said.

Markets are still betting the Federal Reserve is going to hose down the economy with an interest rate hike in December just to be safe.

But regardless of whatever is happening with inflation around the dumpster, the actual dumpster is still on fire.

“You can’t really just exclude energy,” said Alan Detmeister, an economist at UBS. “People can’t just not pay for gas, not pay their heating bills.”

More than half of today’s inflation comes from higher gas and diesel prices alone. And that inflation has been higher than wage growth for six months in a row since the Iran war began.