Surging fuel prices triggered by the war with Iran helped push inflation sharply higher in September, with the government’s consumer price index rising 0.6%, the fastest monthly growth rate since April, the Bureau of Labor Statistics reported Wednesday. On an annual basis, the CPI inflation rate was 3.7%. Both readings were higher than expected.
Gasoline prices rose 9.1% during the month, accounting for more than half of the overall increase in prices. Over the previous 12 months, gasoline prices were up 34.2%.
Factoring out volatile fuel and food prices, the core CPI index rose 0.3% on a monthly basis and 2.6% on an annual basis.
What the analysts are saying: The report suggests that inflation is still very much a problem for the U.S. economy, not least because it means that workers have been losing buying power. Since January 2025, average wages have risen 5.4% — but inflation has risen by the same amount.
“Americans are seeing their pay totally wiped out by inflation,” said Heather Long, chief economist at Navy Federal Credit Union. The latest data suggests that the problem is not limited to the energy sector, and rising fuel prices are “starting to spill into other areas,” including airfares, used car prices, medical services and apparel. “Many people are worse off,” Long said.
Ben Ayers, a senior economist at Nationwide, also expressed concerns about broader inflation. “Obviously we knew there was going to be a spike in energy and fuel prices, but the firm readings for core CPI — which follows up a firmer reading on core CPI in August — those give us concerns that maybe we are seeing more pass-through from fuel prices into other goods and services,” he said, per Bloomberg.
Some analysts said the report makes it more likely that the Federal Reserve will raise rates again this year, though perhaps not at its meeting this month due to political concerns.
RSM Chief Economist Joseph Brusuelas noted that “on a three-month annualized basis, inflation is rising at a 4.6% rate, suggesting that action by the Fed is warranted."
That action may well be delayed, though. “There is little evidence of a cooling or a broad-based disinflationary impulse: 60.96% of all prices increased at greater than a 3% pace in September, which captures the underlying pace of inflation,” Brusuelas wrote Wednesday. “We expect that because of the proximity of the midterm election, the Fed will remain on hold at its Oct. 28 policy meeting and then lift the policy rate by 25 basis points at its December meeting.”
The politics of inflation: A White House spokesperson told Fox News that the inflation report shows that the president is reducing inflation and pointed a finger at former President Joe Biden.
“President Trump is bringing inflation down after it was astronomically high under Biden,” the spokesperson said. The spokesperson also noted that the food price index, which was flat in September but rose 2.5% on an annual basis, had remained “unchanged, month-over-month.”
Kevin Hassett, the director of the National Economic Council, said he sees a “bunch of good news” in the report. He dismissed the fuel price surge as “temporary” and also blamed some of the current inflation on Biden. “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,” Hassett told reporters outside the White House.
Democrats offered a very different interpretation of the data, saying the latest data shows that Trump has failed to help ordinary Americans. Pete Buttigieg, who served as Transportation Secretary under Biden and is seen as a likely presidential candidate in 2028, pinned the latest inflation numbers on Trump’s economic policies. “Inflation is up again. Not because of a pandemic. Not because of a natural disaster. Because of Trump’s war, tariffs, and corporate tax breaks,” he wrote on X. “It really is this simple: Republicans took over, and then drove up the cost of living in America.”
House Democratic Whip Katherine Clark framed the CPI report in terms of the upcoming midterm vote. "The GOP economy is a failure. Inflation remains too high, as families struggle to afford the basics,” she said. “House Democrats are ready to win in November and stop this mess.”
One conservative commentator, Oren Cass of the think tank American Compass, said the inflation numbers will probably just confirm existing opinions rather than change minds. “With respect to the midterms, in particular, this cake has already been baked,” Cass told The New York Times.