Inflation Hits Highest Level in Months as Costs From Trump's Illegal War Eat Workers' Paychecks
"Real wages are falling, and have been falling for months," said one economist.
Data released by the US Bureau of Labor Statistics on Wednesday showed inflation grew faster than expected in September, driven in large part by costs related to President Donald Trump's illegal war with Iran.
The latest Consumer Price Index (CPI) report showed overall prices in September posted a yearly increase of 3.7%, marking the biggest rise in prices since May.
The main drivers of inflation in September were related to energy, which has surged in cost since Iran shut down the Strait of Hormuz earlier this year in retaliation for Trump's unlawful attack in February.
Energy prices increased by an annual rate of 20% in September, with the price of gasoline growing by an annual rate of 34% and the price of fuel oil growing by an annual rate of 74%.
University of Michigan economist Justin Wolfers noted in a Wednesday social media post that average wages are not keeping up with the rate of inflation, meaning workers have seen their purchasing power decrease.
"Real wages are falling," Wolfers wrote, "and have been falling for months."
Jared Bernstein, a senior fellow at the Center for American Progress and who served as chair of the Council of Economic Advisers under former President Joe Biden, said the September data showed that "working families are getting squeezed on both sides (wage, price) of the affordability crunch," as workers' inflation-adjusted earnings are now back to where they were at the start of Trump's second term.
Bernstein's observations were echoed by Heather Long, chief economist at Navy Federal Credit Union, who pointed out that "inflation has nearly wiped out all wage gains since January 2025."
"This is a very different picture from President Trump's first term when wages were up over 15%, well above about 8% inflation," Long added. "It helps explain the frustration many households feel right now with the economy."
Sen. Andy Kim (D-NJ) said that accelerating inflation was yet another sign of Republicans' governing failures.
"Trump and Republicans have no answer for rising inflation caused by soaring gas prices and the war in Iran," Kim wrote. "They're more focused on enriching Trump and his friends and family. This is why we're fighting to take back Congress so we can end the war and bring prices down for you and your family."
Alex Jacquez, senior vice president of policy, advocacy, and research at Groundwork Collaborative, said the CPI report shows why "Americans have lost faith in Trump’s economy."
"The president has repeatedly made promises he can’t keep," Jacquez said, "and despite the band-aid attempts from the White House, there is a gaping hole in our economy just weeks from the midterms. Between the president’s war in Iran and reckless tariffs, his economy is on life support."
