US Inflation Forecast to Hit 3.6% Amid Iran War
Economists predict September inflation will rise to 3.6% due to energy spikes from the Iran war and tariffs, pressuring the Federal Reserve to raise interest rates.
Economists expect September's consumer price index to show headline inflation rising to 3.6% year-over-year, up from 3.4% in August. This acceleration is driven primarily by a surge in gasoline and diesel prices following a U.S. war with Iran, as well as import tariffs and the cost of artificial intelligence infrastructure. While core inflation is expected to moderate, energy costs rose significantly, with gasoline prices jumping between 7% and 9% in September.
Donald Trump has attempted to mitigate oil price spikes by loosening diesel restrictions on Russia, but analysts doubt the move will significantly lower costs. Public sentiment has soured, with a Reuters/Ipsos poll indicating 78% of Americans blame the president's tariffs and foreign policy for rising prices, contributing to a 17% approval rating regarding his handling of the cost of living. Additionally, Trump established a committee of inquiry to investigate Federal Reserve Governor Lisa Cook for alleged mortgage fraud after the Supreme Court blocked an earlier attempt to fire her.
In response to persistent inflation, Federal Reserve Chairman Kevin Warsh recently raised interest rates to 3.9%, the first hike in three years. The central bank is now weighing whether to implement further increases in October or December. These economic pressures arrive just before the November 3 midterm elections and will determine the 2027 cost-of-living adjustments for Social Security recipients.
