U.S. Inflation Accelerates in September
U.S. inflation accelerated in September, driven by higher prices for gasoline, clothing and air travel, the Labor Department said. The consumer price index rose 3.7% from a year earlier, compared with 3.4% in August. Prices increased 0.6% month over month, the largest gain in five months.
Excluding food and energy, consumer prices rose 2.6% over the year, up from 2.4% in August. The monthly increase in this measure, known as core inflation, was 0.3%. The figures leave inflation above the Federal Reserve’s 2% target ahead of the midterm elections, amid concerns about affordability.
Gas prices climbed more than 9% between August and September. AAA reports a national average of $4.33 a gallon, still higher than a month earlier. The report describes disruptions to oil and gas supplies associated with the Iran war as one source of rising costs. Air fares were about 22% higher than a year ago.
Other pressures extend beyond energy. Investment in artificial intelligence and data centers has increased demand for semiconductors and electrical components, contributing to higher prices for some electronics. Goldman Sachs estimated that this expansion has added about half a percentage point to annual inflation, as measured by the Fed’s preferred gauge. PepsiCo has also announced price increases for some snacks and drinks, citing fuel, aluminum and ingredient costs.
The Federal Reserve recently raised its short-term interest rate to about 3.9%. Officials are weighing whether further increases are needed to contain inflation, although higher borrowing costs cannot directly resolve supply disruptions. Investors expect the Fed to leave rates unchanged at its October 27–28 meeting, with another increase possible in December.
The economic backdrop also carries political implications. An AP-NORC poll found 17% of adults approved of President Donald Trump’s handling of the cost of living, while 26% approved of his handling of the economy.