Consumer prices rose 0.6% from August, pushing the annual inflation rate to 3.7%, the highest since the 4.2% peak recorded in May. Core inflation, which strips out volatile food and energy prices, also ticked up slightly. September's rate is the highest recorded before a midterm election, excluding the pandemic, since 1990.
Energy prices remain a major driver. Average gas prices are more than a dollar per gallon higher than this time last year, according to AAA data, and diesel reached a record high last month. Higher energy prices from the Iran war have cost American households more than $1,020 on average, and $133bn in total for all US consumers, according to Brown University.
The economy has consistently ranked as a top issue for voters. A recent Reuters/Ipsos survey found 78% of Americans blame the current administration's policies for inflation that is outpacing their earnings, including 57% of Republicans who support Donald Trump.
The president has sought to downplay his administration's role, pointing to the Iranian government. In a social media post on Tuesday, Trump said Yemen's Houthi group was attacking Saudi Arabia in a deliberate effort to influence the elections: "They've emerged again, probably at the behest of Iran... in a very nasty way, hitting Saudi Arabia, and purposefully trying to drive up Oil Prices, probably prior to the U.S. Elections — NOT NICE."
Last month, the Federal Reserve raised interest rates for the first time since 2023, citing elevated inflation. Higher rates have pushed the average 30-year mortgage rate to 7.40%, affecting borrowing costs for homebuyers.