US Inflation Hits 3.7% in Final Report Before Midterms

US consumer prices rose 3.7% in the 12 months to September, the fastest pace since the spring ahead of next month’s midterm elections, Theguardian reported. The Bureau of Labor Statistics (BLS) said the annual rate climbed from 3.4% in August, with a 0.6% monthly increase.

The figures, the last official inflation reading before voters head to the polls, landed amid surveys showing broad discontent over the cost of living. Gasoline alone accounted for more than half of the overall monthly increase, the outlet reported. Core prices, which exclude energy and food, rose 0.3% on the month and 2.6% annually.

Also read: US adds just 29,000 jobs in September as unemployment hits 4.2%

Key facts

• Annual CPI inflation reached 3.7% in September, up from 3.4% in August, with the monthly reading at 0.6% (BLS, via Theguardian and Foxbusiness).
• Core inflation rose 0.3% month over month to 2.6% annually, above the LSEG consensus of 0.2% and 2.5%, according to Foxbusiness.
• Gasoline was up 34% from a year earlier; fuel oil rose 74% and air travel 22.4% (Theguardian).
• The last inflation reading this high before a midterm election, outside the pandemic, was in 1990 (Theguardian).
• Consumer prices climbed 0.6% on the month, matching the LSEG forecast, while the annual rate came in 0.1 percentage point hotter, per Foxbusiness.

Energy costs behind the number

The price pressure traces largely to the US-Israel war with Iran, which has pushed energy costs sharply higher, Theguardian reported. Fuel oil used for winter heating was up 74% from a year earlier, a concern as households head into colder months, and air travel rose 22.4%. Diesel, which powers domestic supply chains, hit a record high last month, while average gas prices remain more than a dollar a gallon above last year’s level.

Foxbusiness reported that September’s monthly increase picked up from 0.4% in August, reinforcing the trend. The two outlets agree on the headline 3.7% annual rate and the 2.6% core rate; Foxbusiness added the comparison against LSEG economist estimates, showing the annual and core readings both exceeded expectations.

Also read: UK business inflation pressures hit three-year high as Nobel economics prize awarded

Why it matters

The number lands squarely in the closing weeks of a campaign in which the economy has tracked as a top voter concern. Higher energy bills have fed dissatisfaction with the administration, and a Reuters/Ipsos survey cited by Theguardian found 78% of Americans blame current policies for inflation outpacing their earnings, including 57% of Trump’s own supporters. Republicans control both Congress and the White House, so the reading complicates their midterm pitch. The Fed raised rates last month for the first time since 2023, and the 30-year mortgage rate sits at 7.40%, raising borrowing costs for households.

What to watch

All eyes turn to the Federal Reserve, which faces pressure to tighten further when it next meets and weighs its rate tool against elevated prices. The November midterm elections will test how sharply voters respond to the cost-of-living squeeze, and winter fuel costs will be the next real-time gauge of household strain.

Written by

Benjamin

Benjamin Carter covers business, finance, and the stock market for StockPil, focusing on the trends and data that matter to everyday investors.

Sources: The Guardian, Foxbusiness