Trump faces fresh economic nightmare as food and gas prices soar before midterms

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Driven by escalating food and gasoline costs, consumer prices in the United States likely accelerated in September, presenting another setback for President Donald Trump and the Republican Party ahead of the crucial November 3 midterm elections.

The upcoming Consumer Price Index report from the Labor Department follows recent surveys showing a slide in public sentiment and a drop in approval for Trump, largely driven by frustration over rising living costs.

A Reuters/Ipsos survey revealed that approximately 78% of Americans attribute rising prices—which are outstripping wage growth—to Trump’s policies, including import tariffs and the US-Israeli war with Iran.

Nonetheless, underlying inflation, excluding volatile food and energy items, is projected to show only a modest gain for September, potentially easing immediate pressure on the Federal Reserve to raise interest rates this month.

Market experts note that a deceleration in monthly core CPI inflation offers minimal comfort to households, particularly those positioned on the lower end of what is described as a K-shaped economy.

“People care about food and energy. That’s what they feel every day,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University.

“Many voters are at the lower leg of the K-shaped economy. They are suffering because of higher energy and food prices, and I assume that will have an impact on the election results, as a lot of people seem to think.”

According to a Reuters poll of economists, the CPI is expected to have climbed 0.6% last month after a 0.4% advance in August. Higher gasoline costs—which jumped 7.1% in September according to US Energy Information Administration figures—could account for roughly three-tenths of a percentage point of that total.

Meanwhile, food costs are anticipated to rise by at least 0.2%, following consecutive monthly increases of 0.1%.

For the 12 months ending in September, headline CPI is expected to hit 3.6%, up from 3.4% in August. The Federal Reserve relies on the Personal Consumption Expenditures Price Indexes to measure its 2% long-term inflation target.

The figures will also carry significant weight for millions of retirees and Social Security beneficiaries anticipating adjustments to their payouts next year.

The Social Security Administration evaluates CPI data for Urban Wage Earners and Clerical Workers from the third quarter of 2025 through the third quarter of 2026 to calculate annual cost-of-living adjustments for Social Security and Supplemental Security Income benefits in 2027.

These programs support retired seniors, people with disabilities, and eligible surviving family members. The Senior Citizens League projects a 3.5% COLA increase for 2027, an uptick from the 2.8% adjustment in 2026, which would boost average monthly retiree checks by $67.90 to $2,007.

Analysts are closely tracking energy costs to see whether price pressures spread beyond the transportation sector.

While some economists suggest expensive energy has not yet fully filtered into underlying inflation because core CPI is subdued, others warn that record-high diesel prices and ongoing conflict in the Middle East will inevitably raise supermarket bills, citing elevated price readings in business surveys.

Excluding food and energy, core CPI is projected to rise 0.2% in September after a 0.3% gain in August. This anticipated slowing reflects the fading effect of an earlier spike in mobile phone charges related to AT&T service changes, though fee hikes from other carriers in September could still push figures higher.

Airfares likely continued their upward trajectory as jet fuel costs rose, while rent growth remains moderate. Prices for goods are expected to show marginal gains as tariff impacts unwind.

Year-over-year, core CPI is forecast to reach 2.5% in September, up slightly from 2.4% in August. This figure continues to trail core PCE inflation, which reached 3.0% in August, owing to differing weighting criteria between the two baskets.

Last month, the central bank raised its benchmark interest rate by 25 basis points to a range of 3.75%-4.00%—its first hike in three years—and indicated further borrowing-cost increases in the coming months. CME’s FedWatch Tool shows financial markets are pricing in roughly a 22% probability of another rate rise during the October 27-28 policy meeting.

Expectations for an October hike have waned following modest job gains in September and softer PCE inflation readings for July and August. Most economists anticipate the Fed will raise rates in December.

“If the monthly core CPI rise manages to stay in the 0.2% range in September, that should be good enough for the Fed to hold in October,” said Scott Anderson, chief US economist at BMO Capital Markets. “However, it won’t settle the debate about whether more rate hikes are needed down the road.”

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