The September 2026 Inflation Spike

Author: Joel Griffith, Senior Fellow

Plymouth Institute for Free Enterprise

TOPLINE: American families are losing ground and inflation is re-accelerating. Since April, year-over-year prices have risen faster than paychecks, and the war-driven energy squeeze only adds to the existing inflation problem.

BACKGROUND: The Consumer Price Index (CPI) jumped 0.6% in September, an annualized rate of 7.4%. Year-over-year, prices rose 3.7% (nearly double the Federal Reserve’s “target”). Core inflation (excluding food and energy) rose 0.3% in September (2.6% year-over-year).

Energy drove the price surge, but inflation is across the board:

• The war with Iran and disruption of the Strait of Hormuz continue to push energy costs higher.
• Gasoline, up 9.1% in just a single month and 34.2% this past year, accounted for more than half of September’s inflation.
• Year-over-year, the pain extends well beyond energy.

Energy Heating and travel costs	Gasoline ▲ 34.2% Fuel oil ▲ 74.2% Airfare ▲ 22.4% Energy overall ▲ 20.4%
Groceries Food at home is up just 1.8%, but staples rise faster	Coffee ▲ 7.1% Ground beef ▲ 5.4% Carbonated drinks ▲ 4.7% Fruits/vegetables ▲ 3.7%
Import-heavy goods Tariff pressure in household goods	Laundry equipment ▲ 6.7% Toys ▲ 6.6% Sporting goods ▲ 4.7% Apparel ▲ 3.4%
Services Prices climbing here too	Car rentals ▲ 9.1% Auto servicing ▲ 7.8% Water/sewer/trash ▲ 4.8% Lodging away ▲ 4.4%

Borrowing costs are missing from the headline. The CPI does not capture the rising cost of borrowed capital.

• On a $400,000 30-year mortgage, the monthly payment has risen nearly 12% in a year, from $2,476 to $2,770, as rates climbed from 6.3% to 7.4%.

Real (adjusted for inflation) wages are shrinking. Real average hourly earnings declined by 0.5% in September.

• Over the past year, earnings declined by 0.7%.
  • For a typical family, this represents nearly $800 in lost purchasing power.
• Year-over-year inflation has outpaced wage growth every month since April.

AFFORDABILITY 101: A plan to bring prices down.

• Eliminate tariffs. Pursue free trade with free peoples.
• Win the war in Iran. End the threat of Iranian terror, and reopen the Strait of Hormuz.
• Get the fiscal house in order. Government spending bids up the cost of capital.
• Cut regulations. Let the supply of goods and services expand naturally.
• End the central bank’s ability to finance large federal deficits.

CONCLUSION: The conflict with Iran explains much of September’s spike, but is not the underlying problem. Overall inflation averaged 2.8% annualized from January 2025 through February, before Operation Epic Fury commenced. Core inflation averaged an even higher 2.9% annualized. Tariffs have also added to the cost of goods. But the primary longer-term driver of inflation remains monetary policy.