U.S. annual inflation rose to 3.7% in September 2026, accelerated by a 9.1% jump in gasoline prices linked to the Middle East war. With nominal wage growth lagging at 3%, real earnings declined for a sixth straight month. The economic pressure intensifies challenges for Republicans weeks before the midterm elections, as polls indicate 61% of voters disapprove of President Donald Trump's economic management.
Inflation metrics for September 2026
- ▪Core Consumer Price Index inflation, excluding food and energy, rose to 2.6% annually in September 2026
- ▪Consumer prices in the U.S. increased by 0.6% in September 2026 compared to August 2026
- ▪The U.S. Consumer Price Index rose to 3.7% annually in September 2026, up from 3.4% in August, according to the Bureau of Labor Statistics
Gasoline and energy price surge
- ▪Higher energy prices stemming from the U.S.-Israel war with Iran, which began in late February 2026, have cost American consumers $133 billion total, according to Brown University
- ▪A 9.1% month-over-month surge in gasoline prices accounted for over half of the overall U.S. CPI increase in September 2026
- ▪U.S. national average unleaded gasoline prices reached $4.33 per gallon and diesel prices reached $6.30 per gallon, according to AAA data
Housing and mortgage costs
- ▪U.S. shelter and rent prices both increased 0.4% month-over-month in September 2026, marking their highest monthly growth rate in five months
- ▪The U.S. 30-year mortgage rate reached 7.40% in October 2026 amid higher borrowing costs
Technology price increases
- ▪U.S. smartphone prices increased by 0.4% month-over-month in September 2026
- ▪U.S. computer software and hardware prices recorded record annual rate increases in September 2026, driven by artificial intelligence infrastructure spending
Declining real wages and economic hardship
- ▪A Pew Research Center study reported that close to half of Americans are experiencing difficulty paying for basic necessities
- ▪U.S. nominal wages grew by 3% annually in September 2026, trailing the 3.7% inflation rate as real wages have declined year-over-year for six consecutive months through September 2026
Political backlash over economic policies
- ▪A New York Times/Siena College poll in five red states found that 61% of voters disapproved of President Donald Trump's handling of the economy
- ▪A Reuters/Ipsos survey found 78% of Americans, including 57% of Republicans who support Donald Trump, blame the current Trump administration's policies for inflation
- ▪Democratic candidates including Sherrod Brown, Adam Hamilton, and Pete Buttigieg campaigned by tying rising fuel and consumer costs to Donald Trump's Middle East policies
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