US inflation rose in September as economic growth strengthened
The Federal Reserve’s preferred inflation measure accelerated before the midterm elections, while consumer spending helped lift third-quarter growth.
US inflation accelerated in September, with the Commerce Department’s personal consumption expenditures price index rising 3.6% from a year earlier, up from 3.4% in August, according to the Associated Press. The figures were released on October 29, days before the midterm elections, and showed prices rising faster even as the economy continued to grow.
Prices rose 0.5% from August to September, compared with a 0.3% monthly increase in August. The AP described September’s monthly rise as the largest since May. The annual and monthly figures measure different periods: one compares prices with September 2025, while the other measures the change since August.
Fuel and services pushed prices higher
The AP attributed much of the increase to gasoline prices, as oil prices remained above $100 a barrel amid renewed violence in the Middle East. It said oil had been below $70 before the Iran war. Higher prices were not confined to fuel: shipping, hotel rooms and utilities were among the services that became more expensive from August to September.
Core inflation, which excludes food and energy, rose to 3.1% over the year from 3.0% in August, the AP reported. Core prices increased 0.3% during September, matching the previous month. Those figures show that the broader measure’s faster monthly rise did not mean every category accelerated at the same rate.
Growth and spending remained strong
The inflation figures came alongside an estimate that the US economy grew at a 3.4% annual rate in the July-to-September quarter, up from 2.2% in the previous quarter. The Guardian reported that economists surveyed by Reuters had forecast 3.2% growth. Consumer spending increased at a 3.8% annual rate in the third quarter, according to the Guardian, supported in part by low layoffs and moderate hiring.
The Guardian also reported a deterioration in consumer sentiment and said households had been saving less and drawing on savings to fund spending. That helps explain why brisk overall growth and pressure on household budgets can coexist: the growth figure describes the pace of economic activity, while the inflation figures describe continuing price increases.
Federal Reserve held rates before the release
The Federal Reserve left its benchmark interest rate at 3.75% to 4% on October 28 and said inflation remained elevated, the Guardian reported. The next rate decision will weigh the strength of economic activity against price pressure. Higher rates can restrain inflation, but can also slow growth and hiring.
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Sources and context
- Inflation heats up again, days before midterm electionsAssociated Press, republished by PBS NewsHour
- US economy grows faster than expected but inflation rises to 3.7%The Guardian (includes Reuters-sourced material)
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.
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