US inflation rises more than expected ahead of midterm elections

ByRachel Clun Business reporter. 14 October 2026, 13: 47 BST.

Key points

• In early 2022 when Russia introduced its full-scale invasion of Ukraine, oil costs surged over $100 a barrel.
• The pace of cost rises climbed to 3.7%, up from 3.4% in the 12 months to August.
• For example, if a bottle of milk costs $1 but rises to $1.10 a year afterwards, then annual inflation for bottled milk is 10%.
• In September alone, they jumped by 9.1%, accounting for more than half of the growth in inflation, according to the Bureau or Labor Statistics.
• While most of the extra global levies were outlawed by the Supreme Court in February, the president immediately unveiled a new 10% global tariff to replace them.

US inflation rose by more than projected in the year to September, according to official figures, in the final data release before the midterm elections next month.

Notably, the pace of cost rises climbed to 3.7%, up from 3.4% in the 12 months to August.

Inflation was above forecasts, driven by higher gasoline rates which have spiked after disruption to Middle East energy supplies due to the US-Israel conflict with Iran.

Meanwhile, the elections are being fought over cost of living pressures throughout the US.

Inflation is the rate at which the cost of products or services rise over time.

Authorities from the Bureau of Labor Statistics measure inflation through the consumer rate index (CPI).

It tracks the cost changes of hundreds of day-to-day items including fresh food, gasoline and medical services to work out the overall level of inflation in the US economy.

In practice, the bureau updates this so-called basket of goods over time as peoples' spending and lifestyle habits change. There are a number of factors that can cause inflation to rise.

If demand for a product outstrips its supply, that can lead to producers raising rates – the craze for Labubu dolls over recent years and the high resale costs are an example.

Higher incomes can additionally lead to higher demand, for example. It in turn pushes up costs.

Supply can additionally affect inflation. If supply of a product is reduced, but demand remains constant, that can cause rates to rise. A good example of this is crude oil. It is applied to produce gasoline and diesel.

Before the US-Israel war with Iran began, it was trading at just over $70 a barrel but when the conflict constricted crude supplies, the cost swiftly rose and is at present over $100. What is the current rate of inflation?

Inflation has risen to 3.7% in the year to September. It is a higher-than-expected growth fuelled by gasoline costs. Car fuel rates jumped by 34.2% over 12 months.

Overall, energy inflation was up by 20.4% over the year as rates for fuel oil, energy services and electricity climbed. Fuel oil, applied in home heating, was up 74.2% over the year.

Experts remarked the US Federal Reserve – which sets the country's interest rate – will be closely watching to see if energy costs commence to affect other areas of the economy, such as food rates, and drive inflation higher.

Right now, food inflation remains subdued. It was flat over the month of September, and was 2.5% throughout the year.

Core inflation, which strips out food and energy rates, was 2.6%. How have tariffs affected inflation?

Since coming into office for the second time, President Donald Trump has introduced tariffs on most US trading partners worldwide.

Trump argued the tariffs would growth America's tax earnings, boost manufacturing and encourage residents to purchase US-made goods, but the higher import taxes have additionally had an impact on inflation, according to research from the Federal Reserve Bank of New York.

Higher tariffs – which are levies that businesses pay on the goods they import – directly raise rates for US businesses unless the overseas firms they are buying from lower rates to absorb some of the cost.

In response to the new tariffs, the New York Fed discovered exporters reduced costs particularly little, meaning US-based businesses concluded up absorbing almost 90% of the cost of the went on tax.

As numerous US producers rely on parts or materials from overseas, indirectly, higher tariffs additionally affected the costs of locally created goods.

Overall, the Fed discovered that every percentage point rise in average tariffs led to almost a 0.25% rate growth for consumer goods after one year. What tariffs has Trump introduced and why? Has inflation been worse lately?

While inflation is at present above where the US Federal Reserve would like – it has a target of 2% – it has been much higher in previous years.

During the Covid pandemic, problems such as supply chain disruption kicked off pushing inflation up.

Additionally, in early 2022 when Russia introduced its full-scale invasion of Ukraine, oil costs surged over $100 a barrel.

Both of these factors supported to drive inflation to a peak of concerning 9%. Can inflation ever go down?

It's significant to note that if inflation is rising at a slower rate, that does not mean costs are going down – it simply means rates are rising at a slower pace.

For context, a bit of inflation is considered good for an economy as the the Federal Reserve's target rate illustrates.

Plenty of central banks consider inflation of concerning 2% or a little higher to be stable, and at a level that doesn't impact people's purchasing decisions.

Much below that, individuals can delay spending if they expect costs to fall further. That can lead to businesses reducing wages, or reducing the number of workers to cope with lower demand.

Taken together, the developments around US inflation rises more than expected ahead of midterm elections point to a situation that is still moving, and the coming days should bring more clarity.