U.S. inflation heats up across the board, market ramps up expectations for Fed rate hikes

October 14 — Driven by the rebound in fuel prices caused by the Iran war, the U.S. unadjusted CPI annual rate rose to 3.7% in September, further intensifying cost-of-living pressures on Americans as the November midterm elections approach. The unadjusted core CPI annual rate rose from 2.4% in August to 2.6%. Following the data release, U.S. Treasury yields jumped, international gold and silver prices fell sharply, the dollar index climbed, and the market increased bets that the Federal Reserve will raise rates three more times before the end of 2027. The data released by the U.S. Bureau of Labor Statistics marks the first rebound in the U.S. inflation rate since May, underscoring that the energy price shock triggered by the Middle East war continues to affect the world's largest economy. After the war broke out, gasoline and diesel prices surged at one point, then eased somewhat during the summer, but in recent months, as tensions escalated, fuel prices rose again, pushing diesel prices to a record high. U.S. President Trump has been trying to contain the impact of rising energy prices. Polls show that voters dissatisfied with the status quo may channel their discontent toward Republicans in next month's midterm elections, which will determine control of Congress.