Inflation climbs in September as gas prices surge

Inflation climbed to a 4-month high in September as the Iran war continued to drive up gasoline prices, according to federal government data released on Wednesday. The reading came in slightly above economists' expectations.

Inflation stands well above a rate of 2.4% recorded in February prior to the outbreak of the Iran war.

The fresh data arrived as affordability marks a top concern for voters ahead of early November's midterm elections.

Food prices proved stable, however. The price of food stayed flat in September from August, putting annual inflation for food at 2.5%. That figure, which includes prices for groceries and food eaten away from home, stands well below the annual pace of overall price increases.

The Middle East conflict drove up fuel prices and catapulted inflation to a three-year high in May, but inflation eased slightly over the summer after a preliminary peace agreement established an on-again, off-again pause in fighting.

Oil exports from the Gulf have improved in recent weeks but heightened shipping costs and persistent risks have kept the national average gas price above $4.30 a gallon, AAA data shows. Prior to the Iran war, the average price of U.S. gas stood below $3 a gallon.

Last month, consumer sentiment dropped close to the lowest level ever recorded in the 74-year history of the University of Michigan's monthly survey.

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Gross domestic product grew over three months ending in June, defying fear of a downturn triggered by the Iran war. Consumer spending, which accounts for about two-thirds of U.S. economic activity, rose 0.6% in August from July, the largest monthly increase since March 2025, government data on last month showed.

Employers added 29,000 jobs last month, a sharp slowdown from 162,000 jobs added in August, the U.S. Bureau of Labor Statistics said earlier this month. The figure came in well below economists' expectations.

Prior to the latest jobs report, hiring had proven largely resilient this year, even as shoppers and businesses weathered higher costs.