US CPI shows 3.7% annual inflation in September, driven by 9% gas price surge

The U.S. Bureau of Labor Statistics reported on Wednesday that the consumer price index rose 0.6% in September, pushing annual inflation to 3.7%.

The increase matters because it comes just weeks before the November 3 midterm elections, where voters are expected to weigh the cost of living heavily in their decisions. Polls show inflation and affordability are top concerns, and the higher‑than‑expected rise adds pressure on the Trump administration and Republican candidates.

Gasoline prices drove the bulk of the jump, climbing 9.1% from August and making up more than half of the monthly CPI gain. Compared with a year earlier, gas is 34.2% more expensive. By contrast, food prices were flat month‑over‑month, and egg prices fell more than 20% from a year ago.

Core inflation—prices that exclude food and energy—advanced 0.3% in September, bringing the year‑over‑year core rate to 2.6%. Economists had predicted 0.2% monthly and a 2.5% annual core increase, so the data also exceeded expectations for the underlying price trend.

The Federal Reserve responded to the latest figures by raising its target interest rate by a quarter percentage point to a range of 3.75%‑4.0%, its first hike since 2023. Officials cited the need to curb price pressures, especially as the war with Iran continues to elevate global oil costs, which have fed the domestic energy spike.

While the inflation headline is unfavorable for the GOP, other economic indicators remain solid. Job growth has been robust, unemployment is low, and consumer spending stays strong, offering a more nuanced picture for policymakers and campaign strategists.

Looking ahead, markets will watch the Fed’s October meeting for clues on whether further tightening is likely, and political campaigns will likely use the CPI data to argue about the administration’s economic stewardship as voters head to the polls.