Inflation on the rise in September
San Jose, CA – On Wednesday, October 14, the Bureau of Labor Statistics of the U.S. Department of Labor related its monthly report on consumer prices. According to the report, average consumer prices measured by the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.6% in September, much more than the 0.4% increase in August. Over the past year, prices rose 3.7%, another increase from the year over year increase in August, which was lower at 3.4%.
For workers, inflation was even higher, with prices for “Wage Earners and Clerical Workers” up 0.7% for the month, and 3.9% year over year. Either way, prices rose faster than wages, so that “real wages” which show the purchasing power of wages after inflation, fell 0.6% for the month. These numbers reflect the affordability crisis that more and more households are facing.
As seen every time one puts gasoline into their car, gasoline prices soared, rising 9.1% in one month alone. Gasoline prices across the country have gone up more than a third, or 34.2%, from a year ago. Households in the northeast that use fuel oil to heat their homes were hit even harder, with the prices of fuel oil up 15.3% in September, and a whopping 74.2% over a year ago.
Gasoline and other products made from oil have risen sharply even since the United States and Israel launched their war on Iran. Oil flowing through the Strait of Hormuz has been choked off, and production and transport facilities damaged. The Saudi conflict with Yemen also escalated, threatening an alternative transport route to the strait. President Trump has threatened to escalate the war on Iran after the elections in November and is also thinking of joining the Saudi war on Yemen too.
These rising prices of petroleum products are spilling over into other goods and services. Airline ticket prices rose 1.2% in September and are 22.4% higher than a year ago. Postage for mail rose 0.5% in September and are 12.7% higher than a year ago.
“Information technology” goods, such as computers, software and smartphones, rose 0.9% in September, as the artificial intelligence build-out drives up prices for chips and other parts also used in consumer electronics. One example of this was new Apple iPhones. Apple typically rolls out new models in the fall and drops the prices on the older models. This year, the more expensive new models were accompanied by higher prices on the older model phones too.
Higher inflation also drives down bond prices, since bond interest payments are fixed in dollar amounts, so that higher prices reduce the purchasing power of interest payments. These lower prices on bonds cause their interest rates to rise. Other interest rates will also go up. The standard, 30-year fixed-rate mortgage interest rate (which is not in the CPI) has risen from just under 7% when Trump took office to over 7.4% today. This is increasing the cost of buying a house. Home insurance costs, also not in the CPI, went up 6% in 2025, much faster than the overall rate of inflation.