Inflation jumps to 3.7% as gas and diesel prices squeeze consumers ahead of the midterms
NBC News · LC · trust 37/100
The Bureau of Labor Statistics said Wednesday that overall prices rose 3.7% from a year ago, and 0.6% from August. Categories including housing, clothing and restaurant and take out food all saw price increases. Only three major categories saw price declines: groceries, medical care commodities and utility gas service.
“The index for gasoline rose 9.1 percent in September, accounting for over half of the monthly all items increase,” the BLS said in its report.
The report adds to ongoing concerns that persistent inflation is taking a toll on consumers, particularly as wage growth has been stagnant. As of September, the growth in wages was pacing at 3% on an annual basis. Paychecks have not grown faster than inflation since March.
The overall increase was slightly more than had been expected by economists polled by Dow Jones, who forecast a jump to 3.6%.
Core inflation, which excludes food and energy prices, also rose to 2.6% from a year ago, or 0.3% from August. This was also slightly more than had been expected.
Friday’s number is the final inflation report before November’s pivotal midterm elections, in which business owners and consumers have said they will be voting with their bottom line in mind.
“This was a disappointing number,” said Kevin Hassett, chairman of the White House Council of Economic Advisers, on Fox Business Network. Still, he maintained that “a lot of Trump policies are helping to keep inflation down.”
Since August, oil prices have risen to more than $106 per barrel from about $80. The price of unleaded gas, which most consumers use, has risen 45% since late February, when the United States and Israel launched the Iran war. The price of diesel, which powers businesses, farms, the shipping industry and other critical sectors, has soared 70% over the same period.
As early voting kicks off this week, the data also comes at a precarious moment for Republicans defending majorities in the House and the Senate. Polls consistently find that inflation and the high cost of living are top issues this year for voters in both parties.
Stocks fell sharply Wednesday. Before the data, market odds showed that traders had expected the Federal Reserve to wait until December to raise rates. After the data, odds rose above 55% for an October hike.
As of midday Wednesday, the Nasdaq Composite fell 1.2% and the S&P 500 tumbled 0.8%. The Russell 2000 index, which tracks small and medium sized companies, slid 1.5%. The stocks that sold off the most were interest-rate sensitive, such as those in the technology and industrial sectors, which are involved in the ever-expanding AI data center buildout.
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The artificial intelligence boom also reared its head last month, as categories that track the price of computers, software and accessories posted record year-over-year price increases.
Ahead of Wednesday’s report, economists had been watching…
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