Why Did US Inflation Rise to 3.7% Before the Midterms?

US consumer prices rose 0.6% in September and 3.7% over the previous 12 months, accelerating from 3.4% annual inflation in August. Gasoline prices jumped 9.1% in a single month and accounted for more than half of the monthly increase, according to the Bureau of Labor Statistics. Core inflation, which excludes food and energy, was lower at 2.6% year over year but also increased from 2.4% in August.

The timing makes the release politically important. It is the final CPI report before the November 3 midterm elections, and it lands after months of higher energy costs linked to the US-Israel war with Iran and disruption around the Strait of Hormuz. President Donald Trump (opens in a new tab) has made affordability a central political promise, while Federal Reserve Chair Jerome Powell (opens in a new tab) faces a different problem: deciding how much of the inflation increase reflects an energy shock and how much is becoming embedded in broader prices.

Gasoline drove the headline number

The September CPI report is unusually clear about the biggest driver. The gasoline index rose 9.1% and accounted for more than half of the 0.6% monthly increase in the all-items index. The broader energy index rose 5.2% in September and 20.4% over 12 months. Gasoline was up 34.2% over the year.

That is a direct household effect and a sharp move in energy price volatility (opens in a new tab). Drivers see it at the pump, freight companies see it in operating costs, and businesses can pass some transport expenses into prices. It also means the headline 3.7% rate should not be read as if every category rose at the same pace.

Trump's affordability contradiction

Trump's political accountability comes from policy and promise, while food price pressure (opens in a new tab) remains a separate household channel to watch. His administration is fighting a war involving Iran while the conflict and blockade around Hormuz have contributed to a global energy shock. Reporting on the September inflation release tied the rise in fuel prices to Middle East supply disruption. That does not mean every cent of the gasoline increase can be assigned to one presidential decision; oil and gasoline prices reflect global supply, refining, inventories, expectations and local taxes.

The contradiction is still visible. A president who promises lower living costs is presiding over a period in which gasoline is the largest contributor to the latest monthly CPI increase. Voters do not experience that as an abstract geopolitical trade-off. They experience it through commuting costs, delivery prices and household budgets.

The strongest defence for Trump is that core inflation remains much lower than headline energy inflation and that the war is not the only force affecting prices. Core CPI rose 0.3% in September and 2.6% over the year. Food at home actually declined slightly for the month. Those figures support the argument that the current surge is heavily energy-driven rather than a uniform acceleration across the entire consumer basket.

What the Fed sees

Powell and the Federal Reserve have to distinguish a temporary price-level shock from persistent inflation. A central bank cannot produce oil or reopen a shipping lane, but it can respond if higher energy costs begin to change wages, services prices and inflation expectations.

For households and borrowers, the policy trade-off is uncomfortable. Higher rates can restrain demand and inflation, but they also raise financing costs for mortgages, cars and businesses. Holding rates lower can protect growth but risks allowing inflation to persist. The Fed therefore cannot solve the political affordability problem without creating costs elsewhere.

Oil, Hormuz and the wider connection

The CPI print also links domestic US prices to global oil market balance (opens in a new tab). The Strait of Hormuz remains disrupted, attacks on shipping have increased and Saudi infrastructure has been targeted. Those events can add a risk premium to crude oil even before physical shortages reach US consumers.

What happens next

The next question is whether gasoline prices stabilize or continue feeding into transport, airfares and other categories. The BLS already reported airline fares up 1.2% in September and 22.4% over 12 months. Future CPI and producer-price data will show whether the energy shock spreads further.

Powell and other Fed officials will also signal whether they view 3.7% headline inflation as a temporary war-driven surge or evidence that inflation is becoming broader. For Trump, the near-term test is political: the final CPI report before November 3 gives voters a concrete measure against which to judge affordability claims.

Questions people ask

What was US inflation in September 2026?

The Consumer Price Index rose 0.6% from August and 3.7% from September 2025. Annual inflation had been 3.4% in August.

Why did gas prices rise?

BLS data show gasoline prices jumped 9.1% in September. Reporting linked the energy shock to the wider Middle East conflict and disruption of oil flows, although pump prices also depend on refining, inventories and local market conditions.

Will the Fed raise rates?

The CPI report increases pressure on the Federal Reserve, but it does not predetermine a rate decision. Powell and other policymakers will assess whether energy-driven inflation is spreading into more persistent categories.