US inflation rose to 3.7% in September, according to the Bureau of Labor Statistics. This represents the highest rate since May, when annual inflation peaked at 4.2%. Consumer prices climbed 0.6% from August, while core inflation, which excludes volatile energy and food prices, also increased slightly.
The Guardian reported that rising energy costs from the US-Israel conflict with Iran have been a major driver of price increases. Average gas prices remain more than a dollar per gallon higher than last year, according to AAA data, whilst diesel reached record levels last month. Brown University calculated that higher energy prices have cost American households over $1,020 each, totalling $133 billion across all consumers.
The inflation figures emerge weeks before midterm elections, as polling shows widespread dissatisfaction with the Trump administration's handling of the economy. A Reuters/Ipsos survey found that 78% of Americans blame the current administration's policies for inflation outpacing wage growth, including 57% of Republicans who support Donald Trump. This September reading marks the highest inflation rate before a midterm election since 1990, excluding the pandemic period.
The Federal Reserve raised interest rates last month for the first time since 2023, citing elevated inflation. This has pushed the 30-year mortgage rate to 7.40%, affecting borrowing costs for households and businesses.