WASHINGTON (AP) — U.S. inflation accelerated last month as gasoline and many other goods and services became more expensive, evidence that rising prices remain an economic challenge just a few weeks before midterm elections that have focused heavily on affordability.
The consumer price index rose 3.7% in September compared with a year ago, the Labor Department said Wednesday, up from 3.4% in August. On a monthly basis, costs jumped 0.6% from August to September, the biggest gain in five months, up from a 0.4% increase the previous month.
THE FIGURES underscore the lingering impact of the Iran war on gas prices and the stubborn persistence of inflation, which has ticked higher since the war began in late February. The rise isn’t all linked to oil and gas, as surging investment in data centers and AI has also pushed up prices for computer chips and the consumer electronics that use them. Elevated inflation has posed political problems for Republicans in Congress and is a challenge for the Federal Reserve, which is required by Congress to seek stable prices.
Excluding the volatile food and energy categories, core prices rose 2.6% in September from a year ago, up from 2.4% the previous month and higher than economists had expected. And they climbed 0.3% from August to September, an elevated pace that, if it continued for a year, would run well above the Fed’s 2% target.
Higher inflation will likely put more pressure on the Fed to lift its key interest rate at its next meeting Oct. 27-28. Economists noted that the report showed price increases were spread more broadly across the economy than in recent months.
“The report was worse than expected,” Bill Adams, chief U.S. economist at Fifth Third Bank, said in a note to clients. “Price increases were widespread. … Consumer demand seems to be holding up better than the downbeat consumer surveys would suggest, helping businesses maintain pricing power.”
WEDNESDAY’S figures are the last major inflation data to be released before the upcoming elections. Ongoing inflation has taken a toll on Trump’s standing with U.S. voters. A poll by The Associated Press-NORC Center for Public Affairs Research found that just 17% of U.S. adults approve of his handling of the cost of living issue. And only 26% approve of his handling of the economy overall, a new low.
Higher prices are eroding Americans’ earnings. The Labor Department also said Wednesday that average weekly paychecks, when adjusted for inflation, shrank last month compared with a year ago for the first time since May.
Gas prices jumped 9.1% just from August to September, the government’s consumer price index report said. Rising gas costs are a highly visible sign of inflation and often drive down measures of consumer sentiment about the economy.
With fuel much more expensive, air fares rose 1.2% last month and have soared 22% compared with a year ago. Hotel prices rose 2% from August to September and are up 4.4% compared with a year earlier.
Consumers saw some relief in grocery prices, which actually declined 0.1% last month and are up just 1.8% from a year ago. Ground beef prices fell 0.8% in September, though they are still up 5.4% from last year.
The cost of toys, new and used cars, sporting goods, and shoes all rose at a rapid clip last month, the government said.
The government also said Wednesday that Social Security recipients will receive a 3.6% cost of living increase, based on the inflation figures.
The Middle East and Russia-Ukraine conflicts have also sharply inflated the cost of diesel fuel, which is used by long-haul trucks. Higher diesel prices will increase shipping expenses, which in turn could push up prices for a range of goods.
FEDERAL RESERVE officials are watching inflation data closely to determine whether they need to raise their short-term interest rate further, and by how much.
Fed Chairman Kevin Warsh said last month that inflation isn’t moving quickly enough back to the central bank’s target, causing the Fed to hike rates for the first time in three years, to about 3.9%.
