US Inflation Hits 3.7% Amid Iran War and Tariffs
Donald Trump faces political pressure as September inflation rose to 3.7%, driven by surging energy costs from the Iran war and domestic trade tariffs.
Annual inflation in the United States rose to 3.7% in September, exceeding economist forecasts of 3.6% and increasing from 3.4% in August. The Bureau of Labor Statistics reported a monthly increase of 0.6%, the fastest pace in five months. This surge was primarily driven by a 9.1% jump in gasoline prices, which are now 34% higher than a year ago, following military attacks by the U.S. and Israel on Iran in February and the subsequent closure of the Strait of Hormuz.
Donald Trump has faced significant public backlash over these costs, with polls indicating up to 78% of adults blame him for stubborn inflation. To mitigate fuel price pressures, Trump reached a deal with Vladimir Putin to allow Russian diesel back into the market, though the International Energy Agency warned that limited refinery capacity would minimize the impact. Additionally, Federal Reserve research indicates that 90% of 2025 tariffs were passed through to domestic consumers.
In response to the data, Federal Reserve Chair Kevin Warsh has already implemented a quarter-percentage-point rate hike, bringing the benchmark funds rate to a target range of 3.75%-4%. Market expectations for further hikes at the October 27-28 meeting have surged to 50%. Meanwhile, Trump has established a committee of inquiry to investigate Federal Reserve Governor Lisa Cook for alleged mortgage fraud, a move critics describe as an attempt to undermine the central bank's independence ahead of the November midterm elections.
