US inflation climbs to 3.7% as fuel costs surge before midterms

US consumer prices rose 3.7% in September from a year earlier, up from 3.4% in August, the Labor Department reported Wednesday. Monthly prices jumped 0.6%, exceeding the 0.4% increase in the prior month. The annual figure surpassed the 3.6% forecast by economists surveyed by FactSet.

Core inflation, which excludes volatile food and energy, rose 2.6% annually, up from 2.4% in August. Monthly core inflation held steady at 0.3%. Richard Carter of Quilter Cheviot said the data suggests price pressures are feeding into the broader economy.

“The war's fingerprints are all over the report. It's driving a lot of the inflationary pickup.”

Higher gasoline and energy costs, attributed to the Iran war that began in late February, drove the acceleration. Mark Zandi of Moody's said the war's fingerprints are all over the report. Inflation has remained above the Federal Reserve's 2% target for more than five years.

The report arrives less than a month before midterm elections where affordability is a primary voter concern. An AP-NORC poll found only 17% of US adults approve of President Donald Trump's handling of the cost of living, while 26% approve of his economic management overall.

Fed officials are watching data closely to decide on further rate hikes. Chair Kevin Warsh said last month inflation is not falling quickly enough toward the 2% target, prompting a rate increase to about 3.9%. Zandi said the report supports continued rate hikes at upcoming policy meetings.