The U.S. Consumer Price Index (CPI) rose 3.7% in September, driven by a sharp increase in gas prices, reigniting inflation concerns. With the midterm elections approaching on November 3, the rising cost of living has become a key issue, posing a challenge for President Donald Trump, who has emphasized his administration's achievements in stabilizing prices.
The U.S. Department of Labor reported on October 14 that the CPI increased by 3.7% compared to the same month last year, slightly above the Dow Jones estimate of 3.6%. Month-over-month, the index rose by 0.6%, marking the steepest increase in five months since April.
The surge in prices is attributed to skyrocketing energy costs due to the ongoing conflict between the U.S. and Iran. Notably, gas prices jumped 9.1% in just one month, accounting for more than half of the overall monthly CPI increase. Compared to the same month last year, gas prices have risen by 34.2%.
Excluding the volatile categories of energy and food, the core CPI also exceeded expectations, rising 2.6% year-over-year and 0.3% month-over-month. Airfare increased by 1.2% from the previous month, while prices for used cars and trucks (0.7%), education (0.6%), and clothing (0.3%) also saw increases. This indicates that inflationary pressures are emerging across the economy, not just in energy prices.
In addition to the energy price hikes linked to the Iran conflict, the high tariffs from the Trump administration and increased demand for artificial intelligence (AI) products have contributed to rising prices in certain sectors.
Bloomberg reported that inflationary pressures are widespread across the economy, not limited to energy prices.
The Federal Reserve's October Beige Book also confirmed the ripple effects of rising oil prices. The Fed noted, "Reports from all regions indicated the impact of rising oil prices," adding that businesses reported increased costs from high diesel prices and fuel surcharges being passed through the supply chain. The rise in energy prices could elevate transportation and production costs, affecting the prices of other goods and services.
The New York Times analyzed that the sharp rise in September prices, as revealed in the last inflation report before the 2026 midterm elections, could hinder President Trump's last-minute campaign strategy, signaling potential political setbacks for the Republican Party.
Democrats have intensified their attacks on Trump's economic policies. The House Democratic Caucus posted on X (formerly Twitter) that Trump promised to lower prices from his first day in office, but the opposite has occurred, labeling him a "complete failure."
The Republican Party currently holds majorities in both the House and Senate, while Democrats aim to regain control in the upcoming elections. The burden of living costs and rising prices are expected to be significant factors influencing the election outcome.
The White House has attempted to downplay the inflation caused by soaring energy prices, suggesting it may be temporary. Kevin Hassett, chair of the White House Council of Economic Advisers, stated immediately after the CPI report, "The overall inflation rate is due to the surge in energy prices, and we believe the impact will be temporary."
With inflation indicators coming in higher than expected, attention is turning to the Fed's monetary policy. The Federal Open Market Committee (FOMC) is set to decide on interest rates during its meeting on October 27-28.
According to the CME Group's FedWatch, the likelihood of a 0.25 percentage point rate hike this month has increased from 17.7% a week ago to 22.1% the day before, and following the CPI report, it has risen to 37.1%.
Chicago Fed President Austan Goolsbee described the CPI report as "disappointing," noting that there are no clear signs of a slowdown in service prices. However, he indicated that further indicators would need to be considered before making future rate decisions.
* This article has been translated by AI.
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