The U.S. Bureau of Labor Statistics reported that annual inflation reached 3.7% in September, up from 3.4% in August, driven primarily by a 9.1% monthly increase in gasoline prices. The Consumer Price Index (CPI) rose 0.6% from August to September, exceeding economists' expectations and marking the largest monthly gain since April.
Shelter costs continued to climb, with the shelter index increasing 0.4% in September, while the core inflation rate—excluding volatile food and energy prices—rose 0.3% monthly and 2.6% annually. The broader energy index surged 5.2% in September and 20.4% over the past year, reflecting ongoing disruptions to global energy supplies amid geopolitical tensions.
The report, released less than three weeks before the November midterm elections, has intensified scrutiny over economic conditions. Gasoline prices were 34.2% higher than a year earlier, while fuel oil prices surged 74.2% over the same period. Housing costs remained a persistent driver, with the shelter index contributing to sustained inflationary pressures.
Federal Reserve officials are monitoring the data closely, as the report raises the prospect of another interest rate hike to curb inflation. The central bank has maintained a target inflation rate of 2%, and while core inflation remains near that level, its persistence has kept monetary policy under review.
Economic analysts note that while inflation has declined significantly from its 9.1% peak in 2022, the recent uptick underscores lingering challenges. The Iran conflict, which began in late February, has been cited as a key factor in rising energy costs, with global supply disruptions continuing to influence prices.
The report follows surveys indicating that 47% of registered voters consider the cost of living the most important issue in their congressional vote, while 71% disapprove of President Donald Trump’s handling of the economy. Polling from The Associated Press-NORC Center for Public Affairs Research found that only 17% of U.S. adults approve of his handling of the cost of living issue, and 26% approve of his overall economic management.
The Federal Reserve’s next policy meeting will assess whether further interest rate adjustments are necessary to stabilize prices. Economists had forecast a 0.6% monthly increase in CPI, and the actual rise aligned with those predictions, reinforcing concerns about persistent inflationary pressures ahead of the elections.