US Inflation Hits 3.7% as Energy Costs Rise Before Midterms

A monthlong surge in gasoline and other essential costs was already weighing on shoppers before September's inflation figures arrived, according to ABCNews.com. The release came just weeks before the midterm elections.

Energy costs were central to the story. The Financial Times linked the rebound in fuel prices to the Iran war, while NBC News reported that inflation picked up after three months of largely stagnating.

On October 12, the dollar was holding near an 18-month high as investors watched Gulf unrest and the approaching US inflation release, World News CNA reported. Its October 13 coverage described a dollar retreat and expectations that geopolitical escalation risks would remain limited before the midterms, according to World News CNA.

The October 14 consumer price report showed annual inflation reaching 3.7%, up from 3.4% in August, according to The Hill. That exceeded the 3.6% annual increase economists had expected in the consensus forecast cited by CNBC.

Prices rose 0.6% during September, Forbes reported. Gasoline prices jumped 9% over the month, according to CBS Top Stories, and accounted for more than half of the overall monthly increase, The Defiant reported. Clothing and airfares also became more expensive, according to Infobae.

Markets responded by raising expectations of tighter monetary policy. US Treasuries fell as traders increased bets on Federal Reserve rate rises later this month and next year, Bloomberg reported. The dollar reached an 18-month high, according to Business Line.

On October 15, another report showed that price pressure extended beyond consumers. US producer prices rose in September at their fastest pace in more than four years as higher energy costs spread through the economy, according to Bloomberg Economics.

Republicans are campaigning to retain both chambers of Congress with inflation rising again, The Hill reported. The New York Times described the latest consumer price report as keeping pressure on President Trump and the Federal Reserve to contain intensifying price increases.

The renewed bets on rate rises are not a settled forecast. Economists remain divided over whether the Federal Reserve will raise rates, according to Al Jazeera. The producer price report adds another sign of energy-driven pressure, but the supplied coverage reports no new rate decision.

The immediate monetary policy question is whether the Federal Reserve raises rates later this month. Bloomberg reported increased market wagers on that outcome, while Al Jazeera described disagreement among economists.

There is also an adjustment ahead for Social Security recipients. The Social Security Administration said benefits will increase next year to help keep pace with living costs, according to NPR News. The supplied coverage does not specify the size of that increase.