US inflation rose more than expected to 3.7% in the year to September, the Bureau of Labor Statistics reported, in the final official price reading before November's midterm elections.
The pace of price increases accelerated from 3.4% in the 12 months to August and came in above forecasts, according to the BBC. The rise was driven by higher gasoline prices, which spiked after disruption to Middle East energy supplies linked to the US-Israel conflict with Iran.
The timing gives the figure political weight. The midterm elections are being fought over cost of living pressures across the US, and the September CPI report is the last inflation data voters will see before casting ballots.
Why gasoline is pushing prices up
Inflation can rise when demand outstrips supply, or when supply shrinks while demand holds steady. Crude oil, used to make gasoline and diesel, is the clearest current example of the second kind.
Before the US-Israel war with Iran began, crude traded at just over $70 a barrel. When the conflict constricted supplies, the price climbed quickly and now stands at over $100, the BBC reported.
How Trump tariffs feed into consumer prices
Tariffs are the second driver. Since returning to office, President Donald Trump has introduced tariffs on most US trading partners. Some initial levies were scaled back through trade agreements, and in February the Supreme Court outlawed most of the remaining additional global tariffs. Trump immediately announced a new 10% global tariff to replace them.
Higher tariffs directly raise costs for US companies unless overseas exporters lower their prices to absorb the hit. Research from the Federal Reserve Bank of New York found exporters reduced prices very little, meaning US-based businesses absorbed nearly 90% of the cost of the added tax — costs that feed through to shoppers.
The New York Fed also found that every percentage point increase in average tariffs led to nearly a 0.25% price increase for consumer goods after one year. Indirectly, tariffs raise prices of locally made goods too, since many US producers rely on imported parts, materials and ingredients.
What the CPI report measures
The Bureau of Labor Statistics measures inflation through the consumer price index, which tracks price changes across hundreds of goods and services, from groceries and clothing to energy and medical care.
The bureau has measured inflation for more than 110 years and updates its basket of goods as spending habits change. Cars and radios were absent from early data; ice was later replaced by refrigeration in the energy section alongside fuel and electricity.
One point often misunderstood: slower inflation does not mean prices are falling. It means they are rising at a slower pace.
How far above target inflation remains
At 3.7%, inflation sits well above the Federal Reserve's 2% target, though far below its recent peak. Inflation hit about 9% during the Covid pandemic, when supply chain disruption pushed prices up, and after Russia's 2022 full-scale invasion of Ukraine drove oil above $100 a barrel.
Several questions now hang over the figure: how it will shape voter behaviour next month, whether the Federal Reserve adjusts interest rate policy in response, and whether the conflict with Iran eases or keeps gasoline prices elevated. The BBC's report was cut off before detailing core inflation or the monthly change in the BLS release.