Gas Up 34% in a Year, Inflation Hits 3.7%, Midterms in Three Weeks

The Number Nobody Wanted Three Weeks Out

According to BBC News, inflation accelerated to 3.7% over the 12 months to September, beating forecasts. The Federal Reserve targets 2%. We are not close to 2%, and we are moving in the wrong direction.

This is the final CPI release before the elections next month, which means campaigns on both sides now have their closing argument handed to them in a government spreadsheet. One side gets to say "I told you so." The other side gets to explain why a war and a tariff regime are somehow different from the things that made prices go up.

The midterms are being fought over cost of living pressures. That was true before this report. It is much more true now.

Gasoline Did the Heavy Lifting

Car fuel prices jumped 34.2% over the year. In September alone they rose 9.1%, which accounts for more than half of the monthly increase in inflation, per the Bureau of Labor Statistics.

The cause is the US-Israel war with Iran, which has disrupted Middle East energy supplies. Before the conflict began, crude oil traded at just over $70 a barrel. It's now above $100. Do the math on what that does to a commuter who drives forty minutes each way to a job that hasn't given them a raise.

And it isn't just the pump. Overall energy inflation hit 20.4% over the year, with electricity and energy services climbing too. Fuel oil, the stuff that heats homes, is up 74.2%. Seventy-four percent. Winter is coming, and the heating bill has apparently heard about the war.

Tariffs Are Still in the Room

Let's not let the other guilty party off the hook. Since returning to office, Trump has slapped tariffs on most US trading partners. The Supreme Court struck down most of the additional global levies in February. Trump immediately announced a new 10% global tariff to replace them.

He promised the tariffs would boost tax revenue, revive manufacturing, and get Americans buying American. What they have also done, per research from the Federal Reserve Bank of New York, is raise prices. The New York Fed found that foreign exporters barely cut their prices, so US businesses ended up absorbing nearly 90% of the cost of the tax.

The same research found that every percentage point increase in average tariffs led to a price increase of nearly 0.25% for consumer goods after a year. Tariffs are a tax, and the people paying it are the ones standing in the checkout line.

The Quiet Good News That Isn't Very Good

Here's the part the administration will cling to. Food inflation is subdued, flat in September and 2.5% over the year. Core inflation, which strips out food and energy, sits at 2.6%.

That's real, and worth stating plainly. The broad economy has not caught fire. This is, for now, a story about energy.

But experts say the Fed will be watching closely to see whether high energy costs start leaking into everything else. Think about what moves groceries to the store. Diesel. If fuel stays this expensive, the trucks keep charging more, and eventually the cereal aisle notices.

Trump's Midterm Fuel Fix

BBC News also points to a related piece asking whether Trump's push to reduce fuel costs before the midterms will work. That's the question, isn't it? A president who wants cheaper gas in the weeks before an election is trying to fix a price spike caused in part by a war his administration is fighting.

Prices don't fall because a politician wants a good news cycle. Crude is over $100 because supply is constricted. A press conference does not unconstrict it.