Key inflation gauge heats up thanks to high gas prices — day after Fed hits pause on rate hikes
By
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Fed → heat → hikes
Published Oct. 29, 2026, 11:15 a.m. ET
An inflation gauge closely monitored by the Federal Reserve accelerated last month, showing that prices remain elevated less than a week before midterm elections in which the uncomfortably high cost of living for millions of Americans has become a central issue.
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cost → publish → Americans
On a monthly basis, prices climbed 0.5%, up from 0.3% in August and the highest figure since May.
uncertain
prices → climb → May
Rising gas prices drove much of the inflation increase as renewed violence in the Middle East has kept oil prices above $100 a barrel, up from below $70 before the Iran war.
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violence → rise → war
But prices also rose outside of fuel costs.
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prices → rise → costs
The cost of services such as shipping, hotel rooms, and utilities increased rapidly from August to September, a sign that inflation is spreading and growing more entrenched.
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inflation → increase → September
“The inflation outlook has become more concerning,” Ksenia Bushmeneva, an economist at TD, a bank, wrote in a commentary on the report.
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Bushmeneva → become → report
“Price pressures are showing signs of heating up.
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pressures → show → signs
Elevated gasoline prices are keeping headline inflation hot, but underlying pressures are also broadening.”
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pressures → keep → inflation
Polls show that the rise in inflation has soured most voters on the economy, leading them to give President Trump poor marks on handling rising prices.
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rise → show → prices
Trump campaigned in 2024 on lowering the cost of living, including bringing the cost of gas below $2 a gallon.
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Trump → campaign → 2
It currently averages about $4.25 a gallon nationwide.
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It → average → 4.25
Excluding the volatile energy and food categories, core inflation also picked up last month.
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inflation → exclude → categories
It increased 3.1% from a year ago in September, up from 3% in August, the Commerce Department said.
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Department → increase → August
And from August to September, core prices rose 0.3%, the same as the previous month.
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prices → rise → month
Separately, the government also said the economy grew at a strong 3.4% annual rate in the July-September quarter, much faster than the 2.2% growth in the April-June quarter, as consumer spending jumped and business investment rose, fueled by spending on artificial intelligence infrastructure.
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investment → say → infrastructure
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Report → start → news
Consumer spending climbed 3.8% at an annual rate in the third quarter, the second straight quarter of strong growth and far above the 0.7% increase in the first three months of the year.
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spending → climb → year
Yet there are signs that consumers may struggle to maintain that level of spending.
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consumers → be → spending
Inflation is eroding their incomes: In September, inflation-adjusted incomes, after taxes, declined 0.3% from the previous month.
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incomes → erode → taxes
Consumers appear to be dipping into savings or relying on credit to fuel much of their consumption.
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Consumers → appear → consumption
“Together with higher borrowing costs, these headwinds are likely to weigh on consumer demand in the coming quarters,” Bushmeneva said.”
The reports come a day after the Federal Reserve, the agency tasked with combatting inflation, left its key interest rate unchanged.
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Reserve → weigh → rate
Yet strong economic growth and persistently higher prices could mean more pain for Americans when the Fed meets in December.
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Fed → mean → December
The Fed is much more likely to hike its key interest rate, which could lift borrowing costs across the economy.
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which → hike → economy
Thursday’s inflation data comes from the personal consumption expenditures price index, which typically echoes the better-known consumer price index published earlier this month.
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which → come → index
The Fed more closely monitors the PCE index because it puts less weight on housing prices and allows for changes in consumers’ shopping habits.
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it → monitor → habits
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