Inflation accelerated in September, rising 0.6% for the month and 3.7% over the year, the Bureau of Labor Statistics reported Wednesday — up from 3.4% in August and above the 3.6% economists had forecast. The monthly gain was the largest in five months, and gasoline did most of the damage: the gasoline index jumped 9.1% in September, accounting for over half of the overall increase, with the broader energy index up 5.2%. Gasoline is now 34.2% more expensive than a year ago. Core prices, which strip out food and energy, also came in hotter than expected, up 0.3% on the month and 2.6% on the year. Food prices were flat, groceries actually fell 0.1%, shelter rose 0.4%, and airfares climbed 1.2% — up 22.4% from a year earlier.
The driver is the war. Inflation stood at 2.4% in February, before the United States and Israel began military action against Iran on February 28. A ceasefire took effect April 8, but President Trump declared it over on July 10, and fighting around the Strait of Hormuz has continued since. Oil has climbed above $106 a barrel, from about $80 in August, and the national average at the pump stood at $4.33 a gallon on Wednesday, according to AAA.
“A lot of Trump policies are helping to keep inflation down, but the energy shock is really the headline story today.”
That was Kevin Hassett, director of the White House National Economic Council, on Fox Business. Hassett conceded the report showed a disappointing spike and blamed the war in Iran for delivering a negative shock to energy, while pointing to what the report did not show: food prices were stable and drug prices fell over the month. The administration's case is that this is an imported energy shock hitting an otherwise cooling economy, not homegrown overheating.
Democrats moved immediately to make it about the president's promises. Rep. Brendan Boyle, the top Democrat on the House Budget Committee, said Trump had promised to end inflation and lower costs “on day one” and had done “the exact opposite,” blaming the war and the administration's tariffs for driving up costs for American families.
What happens next runs through the Federal Reserve. The Fed raised rates in September for the first time since 2023, to a target range of 3.75% to 4.00%, and meets again on October 27–28, days before the November 3 midterms; market odds of another hike rose after Wednesday's report. This is the last major inflation release before Election Day — the October figures are not due until November 10, a week after Americans vote.
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