Americans Get Final Inflation Report Before Midterms. Here’s What It Shows.

Inflation ticked up 3.7% in September from the previous year, according to data released Wednesday by the Bureau of Labor Statistics.

The 0.3-point increase from August’s number was mostly in line with expectations, with analysts predicting a 0.2 percentage-point increase from August’s 3.4% year-over-year rate.

Wednesday’s numbers are part of the last inflation report before the November midterm elections. Rising consumer prices have become a major issue for both parties with higher inflation plaguing the economy since 2021.

Elevated energy costs continued to drive inflation with oil prices surging amid tensions with Iran. The inflation report showed energy prices rose 5.2% over the month compared to August’s 2.1% increase. Shelter costs rose 0.4% during the month, while food prices remained unchanged.

Treasury Secretary Scott Bessent said last week in the Oval Office that inflation should head back to the Federal Reserve’s target of 2% after the conflict with Iran ends.

“Once we get on the side of this Iran conflict, energy markets are going to be well supplied, and we will move down toward the Fed’s target, and mortgage rates and the 10-year will come back down,” Bessent said.

The hotter report will make it difficult for the Federal Reserve to cut interest rates. Fed Chairman Kevin Warsh has repeatedly stated that he wants to get inflation back to the Fed’s goal of 2%, calling inflation a tax on the American people.

“It has been a tax on the American people and businesses. We plan on getting rid of that tax,” he said. “That means we need a regime change in policy, and we need new consideration of practices, some of which have been working, some of which haven’t.”

In September, the Federal Reserve raised interest rates for the first time in over three years to help combat rising inflation from elevated energy prices. The central bank lifted the target range from 3.5%-3.75% to 3.75%-4.0%. The Federal Reserve is expected to hold interest rates steady at its next meeting later this month.

In the past, the Federal Reserve has been slow to react to hotter inflation. Despite inflation rising above target in March of 2021, the Federal Reserve did not raise rates until one year later — at that point, inflation was up to 8.5%

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