Inflation in the United States accelerated in September, reflecting ongoing price pressures just days before the midterm elections, according to government data released Thursday. The personal consumption expenditures (PCE) price index, closely watched by the Federal Reserve, rose 3.6% compared with a year earlier, up from 3.4% in August. On a monthly basis, prices increased by 0.5%, the largest gain since May, surpassing the 0.3% rise recorded the previous month.

The increase was largely driven by higher gasoline prices, which have remained elevated amid renewed conflict in the Middle East. Oil prices recently surged above $100 per barrel, significantly higher than levels below $70 before the outbreak of war involving Iran. However, inflationary pressures extended beyond energy costs. The prices of services, including shipping, hotel accommodations, and utilities, also rose sharply from August to September, indicating that inflation is becoming more entrenched in the broader economy.

Economists warned of growing concern about the inflation trend. Ksenia Bushmeneva, an economist at TD Bank, noted that price pressures are intensifying, which could complicate the inflation outlook. The rise in inflation has had political implications, with consumer dissatisfaction toward the economy affecting public opinion ahead of the midterms. Polls suggest that many voters disapprove of President Donald Trump’s handling of inflation, despite his 2024 campaign promises to reduce living costs, including lowering gas prices to under $2 per gallon. Currently, the national average price for gasoline stands at approximately $4.25 per gallon.

Core inflation, which excludes the more volatile food and energy sectors, also edged up in September. It rose 3.1% from a year earlier, compared with a 3.0% increase in August. Monthly core prices increased by 0.3%, matching the previous month's rate, further underscoring persistent price pressures.

Consumer spending remained robust in the third quarter, increasing at an annual rate of 3.8%, following a 0.7% rise in the first quarter of the year. Business investment surged by 12.7%, the largest jump in six years, driven in part by increased spending on artificial intelligence infrastructure. Despite this strong economic activity, inflation-adjusted after-tax incomes fell 0.3% in September, suggesting that consumers are facing financial strain. Many may be relying on savings or credit to sustain spending levels amid rising costs.

These developments come as the Federal Reserve holds its policy rate steady, having recently paused interest rate increases. However, the combination of strong growth and persistent inflation raises the possibility of further rate hikes when the Fed convenes in December. Higher borrowing costs could exert additional pressure on consumer demand and economic growth in the months ahead.