US consumer prices rose sharply in September in the final inflation report before the upcoming midterm elections, strengthening expectations of another interest rate increase by the Federal Reserve later this month.
Annual inflation accelerated to 3.7 per cent from 3.4 per cent in August, while consumer prices increased by 0.6 per cent month-on-month, according to the Consumer Price Index (CPI) report published on Wednesday by the US Labor Department’s Bureau of Labor Statistics (BLS), reports Al Jazeera.
Energy prices drive inflation surge
Rising global energy prices, driven by ongoing tensions between the US and Iran and the Russia-Ukraine conflict, pushed petrol prices higher and emerged as the main contributor to September’s inflation surge.
Petrol prices jumped by 9.1 per cent during the month, accounting for more than half of the overall monthly increase in the CPI. They were also up 34.2 per cent compared with the same period last year.
“The directionless war in Iran continues to disrupt global supply chains, driving up the prices of food and fuel,” Kyle Moore, chief economist at economic think tank The Century Foundation, told Al Jazeera.
Data from the American Automobile Association (AAA), which monitors daily fuel costs, showed that the average price of a gallon of petrol rose to $4.33 ($1.14 per litre), up from $4.31 a month earlier.
Diesel prices also increased to $6.29 per gallon ($1.66 per litre), compared with $6.23 in the previous month.
Patrick DeHaan, head of petroleum analysis at GasBuddy, noted in a post on X that 2026 had recorded 158 days when average petrol prices exceeded $4 per gallon, more than in any previous year.
Shelter costs rise as food prices remain stable
Shelter costs increased by 0.4 per cent from August, following a 0.3 per cent rise in the previous month.
Overall food prices, however, remained unchanged, offering some relief to consumers. Prices for food away from home, including restaurant meals, rose by 0.2%, while food-at-home prices, which track grocery items, fell by 0.1 per cent .
Among grocery items, poultry prices increased by 0.7 per cent , fruit and vegetable prices rose by 0.5 per cent, and juice prices climbed by 1.1 per cent. Milk prices, meanwhile, fell by 2.1 per cent, while beef prices declined by 0.9 per cent.
In the technology sector, prices for computer software and accessories surged by 28 per cent year-on-year, reflecting heavy investment in artificial intelligence (AI) infrastructure.
“The AI boom is playing a huge part, and we have all read about the hundreds of billions being poured into data centres, AI firms, and models,” Rami Cassis, principal of Parabellum Investment, told Al Jazeera.
Fed rate decision and political fallout
The inflation report comes days before the Federal Reserve announces its monetary policy decision later this month.
Last month, the US central bank raised interest rates by 25 basis points, marking its first rate increase in three years and bringing the target range to 3.75–4 per cent.
Economists remain divided over whether policymakers will raise rates again or keep borrowing costs unchanged.
According to CME FedWatch, financial markets see a 52.9 per cent probability that rates will remain at 3.75–4 per cent, while the likelihood of another quarter-percentage-point increase to 4.00–4.25 per cent stands at 47.1 per cent.
Persistent inflation is also adding to political pressure on Republicans ahead of the 3 November midterm elections.
A recent Reuters/Ipsos poll found that approximately 78 per cent of Americans attributed rising prices to the policies of US President Donald Trump.
Following the release of the inflation report, US stock markets moved lower in midday trading. The Nasdaq fell by 0.8 per cent and the S&P 500 dropped by 0.6 per cent, while the Dow Jones Industrial Average remained roughly flat.
