October 2, 2026
WASHINGTON (AP) — Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying pressure on households, wiping out pay gains that many have received and ensuring that the Federal Reserve will keep raising interest rates aggressively.
Consumer prices rose 8.2% in September compared with a year earlier, the government said Thursday. On a month-to-month basis, prices increased 0.4% from August to September after having ticked up 0.1% from July to August.
Yet excluding the volatile categories of food and energy, so-called core inflation jumped last month — a sign that the Fed’s five rate hikes this year have so far done little to cool inflation pressures. Core inflation climbed 0.6% from August to September and 6.6% over the past 12 months. The yearly core figure is the biggest increase in 40 years. Core prices typically provide a clearer picture of underlying price trends.
Major U.S. markets swung sharply lower, with the Dow Jones Industrial Average futures moving from several hundred points up to a 400-point decline in seconds. Markets in Europe tumbled as well.
Thursday’s report represents the final U.S. inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices have fueled public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.
Higher prices for many services — health care, auto repair, and housing, among others — drove inflation last month. The cost of eyeglasses and eye care, for example, jumped 3.2% from August to September, the sharpest one-month increase on records.
Inflation in services is being fueled mainly by steady consumer demand and higher labor costs. Both Delta and American Airlines, for example, reported strong revenue and profit growth this week, driven by increased demand from travelers. Airfares rose a brisk 0.8% from August to September.
A range of services industries, including airlines, hospitals, and even veterinary services — are having to rapidly raise wages to attract the workers they need. Those higher labor costs, in turn, are often passed on to consumers in the form of higher prices.
Inflation has swollen families’ grocery bills, rents, and utility costs, among other expenses, causing hardships for many and deepening pessimism about the economy.
Prices are accelerating even as some of the supply chain problems bedeviling many manufacturers are easing. Core goods prices, which sent inflation higher last year, were unchanged last month.
As the elections near, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46% of people now describe their personal financial situation as poor, up from 37% in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.
The September inflation numbers aren’t likely to change the Fed’s plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans, and business loans and cool inflation by slowing the economy.
Minutes from the Fed’s most recent meeting in late September showed that many policymakers have yet to see any progress in their fight against inflation. The officials projected that they would raise their benchmark rate by an additional 1.25 percentage points over their next two meetings in November and December. Doing so would put the Fed’s key rate at its highest level in 14 years.
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