US inflation rose to 3.7% in the year to September, official figures showed, driven by surging fuel prices linked to the US-Israel conflict with Iran, according to the BBC.
The increase, up from 3.4% in the 12 months to August, came in above forecasts. It is the final inflation data release before the midterm elections next month, which are being fought over cost-of-living pressures across the country.
The figures, measured by the Bureau of Labor Statistics through the consumer price index, track price changes of hundreds of day-to-day items including fresh food, gasoline and medical services.
Why petrol and fuel prices are rising
Vehicle fuel prices jumped 34.2% over 12 months and 9.1% in September alone, accounting for more than half of the increase in inflation, according to the Bureau of Labor Statistics.
The surge follows disruption to Middle East energy supplies caused by the US-Israel war with Iran. Crude oil, used to make gasoline and diesel, traded at just over $70 a barrel before the conflict began; constricted supplies have since pushed the price above $100.
Overall energy inflation was up 20.4% over the year as prices for fuel oil, energy services and electricity climbed. Fuel oil, used in home heating, rose 74.2% over the year — a particular concern for households heading into winter.
Elsewhere, price pressures remain subdued. Food inflation was flat in September and 2.5% across the year. Core inflation, which strips out food and energy prices, was 2.6%.
Social Security increase 2027: what the figures mean for benefits
Shortly after the inflation figure was released, the Social Security Administration announced that benefits — including old age, survivors and disability insurance — would rise by a similar amount, 3.6%, in 2027.
The administration said the increase will mean an average retirement benefit rise of $75 a month.
- The cost of living adjustment takes effect in January for about 72 million people.
- Increased payments for the 7.2 million receiving supplemental security income start on 31 December.
Trump tariffs inflation link adds to price pressures
Since returning to office, President Donald Trump has introduced tariffs on most US trading partners, arguing they would increase America's tax earnings, boost manufacturing and encourage people to buy US-made goods.
The Supreme Court outlawed most of the additional global levies in February, but the president immediately announced a new 10% global tariff to replace them.
The higher import taxes have also fed into inflation, according to research from the Federal Reserve Bank of New York. Higher tariffs directly raise prices for US companies unless the overseas firms they buy from lower prices to absorb some of the cost.
The New York Fed found exporters reduced prices very little in response to the new tariffs, meaning US-based businesses ended up absorbing nearly 90% of the cost of the added tax. Indirectly, higher tariffs also affected the prices of locally made goods, since many US producers rely on parts or materials from overseas.
What the Federal Reserve watches next
Experts said the Federal Reserve, which sets the country's interest rate, will be closely watching whether energy costs begin to affect other areas of the economy, such as food prices, and drive inflation higher.
That question — and how the above-forecast figures shape the final weeks of the midterm election campaign — will determine whether September's jump proves a one-off shock from the conflict or the start of broader price pressure.