Inflation Climbs to 3.7% on War-Driven Gas Spike — SkimNews
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- The Bureau of Labor Statistics reported CPI rose 3.7% year-over-year in September, up from 3.4% in August, with core CPI climbing to 2.6% from 2.4% — a print Moody's Mark Zandi called 'uncomfortably strong' with 'the war's fingerprints all over the report.'
- Gasoline prices jumped 9.1% in September alone, accounting for more than half the monthly CPI increase, pushing the national average to $4.33/gallon — up 45% from $2.98 before the Iran war began in late February.
- Diesel prices averaged $6.30/gallon, roughly 68% higher than pre-war levels, and economists warned higher fuel costs take months to fully pass through to consumers, threatening trucking, farming, manufacturing, and heating bills.
- Wells Fargo Investment Institute projected the Fed will raise rates between now and spring 2027, and Zandi said the CPI report 'gives more support to the argument that the Fed is going to continue raising rates' as inflation has stayed above the 2% target for over five years.
- The Iran war has crippled oil traffic through the Strait of Hormuz and damaged regional refining infrastructure, with Wells Fargo estimating lost capacity could keep energy prices elevated until mid-2027 even after key waterways fully reopen.
- University of Michigan consumer sentiment plunged to its second-lowest reading on record in September, while the Social Security Administration announced a 3.6% 2027 COLA — insufficient according to 76% of respondents in an AARP survey.
- Inflation drivers beyond the war include tariffs producing 'largest-ever monthly changes' in toy and recreational good prices, AI data center chip demand that Apple and Microsoft cited for MacBook, iPad, and Xbox price hikes, and Ukraine-related attacks on Russian refineries lifting diesel costs.
Why it matters: The 3.7% CPI print lands less than a month before midterms where affordability is the top voter issue, handing Democrats fresh ammunition, while the 9.1% monthly gasoline spike and 68% surge in diesel since February threaten to ripple through nearly every sector of consumer spending from holiday travel to grocery delivery.
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