US inflation accelerates to 3.7% ahead of midterm elections

US consumer prices rose faster in September than in August, according to the final inflation report before the midterm elections. Annual inflation reached 3.7%, while prices increased 0.6% over the month, the Labor Department’s Bureau of Labor Statistics (BLS) reported.

Fuel accounted for more than half of the monthly rise in the Consumer Price Index: petrol prices climbed 9.1% in September and were 34.2% higher than a year earlier.

The report came ahead of the Federal Reserve’s interest-rate decision later this month. Last month, the central bank raised rates by 0.25 percentage points for the first time in three years, setting its target range at 3.75–4.00%.

Economists split on the rate outlook

CME FedWatch put the chance of rates staying at 3.75–4.00% at 52.9%. It put the likelihood of another quarter-point increase, to 4.00–4.25%, at 47.1%.

Shelter costs rose 0.4% from August, after a 0.3% increase the previous month. Overall food prices were unchanged: food away from home rose 0.2%, while grocery prices fell 0.1%.

Fuel and grocery price changes

The American Automobile Association (AAA) reported an average petrol price of $4.33 per gallon, up from $4.31 a month earlier. Diesel averaged $6.29 per gallon, compared with $6.23 the previous month.

At grocery stores, poultry prices rose 0.7%, fruit and vegetable prices increased 0.5%, and juice prices climbed 1.1%. Milk fell 2.1% and beef declined 0.9%. Prices for computer software and accessories were 28% higher than a year earlier.

The inflation report was released days before US midterm elections scheduled for November 3. A recent Reuters/Ipsos poll found that about 78% of Americans blamed President Donald Trump’s policies for rising prices.

US stocks moved lower after the report. The Nasdaq fell 0.8% and the S&P 500 lost 0.6%, while the Dow Jones Industrial Average was roughly flat in midday trading.