US Inflation Climbs to 3.7% in September, Above Forecasts, as Gasoline Surges
Annual US inflation rose to 3.7% in September from 3.4% in August, beating expectations as gasoline prices jumped, in the last report before next month's midterms.
US consumer prices rose faster than economists expected in the year to September, according to official figures. The pace of inflation increased to 3.7% from 3.4% in the 12 months to August. The elections are being fought largely over cost-of-living pressures.
The BBC reported that the surprise was driven mainly by gasoline, which has spiked after disruption to Middle East energy supplies linked to the US-Israel conflict with Iran. The sources do not give the exact forecast figure.
What drove the increase
The Bureau of Labor Statistics said gasoline prices rose 9.1% in September alone. That single category accounted for more than half of the increase in overall inflation.
Across the whole year, energy inflation was up 20.4%. Prices for fuel oil, energy services and electricity all climbed. Fuel oil, used for home heating, was up 74.2% over the year.
Crude oil sits behind much of this. Before the conflict began it traded at just over $70 a barrel. After supplies were constricted, the price rose quickly and is now above $100.
Food prices remain calm
Outside energy, the picture is milder. Food inflation was flat over the month of September and stood at 2.5% across the year.
Experts quoted by the BBC said the Federal Reserve, which sets US interest rates, will be watching closely. The question is whether higher energy costs start to spread into other areas, such as food, and push inflation higher.
Tariffs add to the pressure
The BBC also pointed to trade policy. President Donald Trump has introduced tariffs on most US trading partners. Some early tariffs were scaled back after trade deals, and in February the Supreme Court outlawed most of the remaining additional global levies. The president then announced a new 10% global tariff to replace them.
Research from the Federal Reserve Bank of New York found that exporters cut their prices very little. As a result, US-based businesses absorbed nearly 90% of the cost of the added tax, according to the BBC's summary of that research.
What it means for you
The most direct effect is at the pump and in home energy bills, especially for households that heat with fuel oil. Grocery prices have so far been steadier, though the Fed's concern is that this could change if energy costs spread through the economy.
Interest rates are set by the Fed, and the sources do not say what it will do next. Watch for how it responds to energy-driven inflation, and for whether food prices begin to move in coming months.
Also read Mortgage Rates Today: Why Borrowing Costs Are Rising Again in the US and UK
Quick answers
What is the consumer price index?
The CPI is the Bureau of Labor Statistics' measure of price changes across hundreds of goods and services, from groceries and clothing to energy and medical care. The bureau uses it to work out overall inflation.
Why did inflation rise in September?
Mainly gasoline. Prices jumped 9.1% in the month after disruption to Middle East energy supplies, and oil is now above $100 a barrel.
Are food prices going up?
Only slowly. Food prices were flat in September and 2.5% higher than a year earlier.
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