Oil has climbed above $100 a barrel. Gasoline averages well over $4 a gallon, while diesel sits just under the record highs it hit in September. With the U.S. war with Iran now in its eighth month, American households are paying the bill at the pump, in grocery aisles and on mortgage statements.
The consumer price index is expected to rise 0.6% in September, according to the median projection in a Bloomberg survey of economists. That would mark the biggest jump in five months, after a 0.4% rise a month earlier. The Bureau of Labor Statistics will release the figures Wednesday. Higher gasoline prices likely drove the increase, even as underlying price pressures eased.
The figures arrive less than a month before the U.S. midterm elections. Inflation has become a central issue for voters.
Who Pays for the Price Spike
The pain isn't abstract. Gas, groceries and everyday goods keep getting more expensive, and companies are passing on their costs. PepsiCo said last week it was raising prices on Doritos and other products, citing higher fuel, aluminum and commodity costs.
The Labor Department is also expected to report Wednesday that prices rose 0.2% month over month in September and 3.6% from a year earlier. On Thursday, the department will release the producer price index, which tracks inflation before it reaches consumers. Economists expect the figure to climb from 5.4% in August, already up from 4.8% in July. Wholesale costs like these tend to reach store shelves later.
The war shows no sign of easing. Renewed violence pushed oil above $100, and September is expected to bring more of the same, with both sides in the conflict unwilling to concede ground.
A Housing Market Locked Out
For people hoping to buy a home, the picture is bleak. Freddie Mac reported Thursday that the average long-term U.S. home-loan rate rose for a seventh consecutive week, reaching a level higher than any point in nearly three years. The National Association of Realtors will report existing-home sales for September on Tuesday; economists expect sales to hold steady from August, when they fell to their slowest annual pace in more than a year.
The housing sector has struggled since 2022. Four years have passed. Sales of previously occupied homes were essentially flat last year, at a 30-year low. Rising mortgage rates have thwarted prospective buyers.
Consumers Pull Back, Banks Cash In
Shoppers spent strongly in August, despite complaints about gas station and grocery prices. Retail sales rose 1.2%, nearly twice the forecast. Economists now expect shoppers to pull back in September, with most forecasting a 0.65% increase. The National Retail Federation will release its holiday forecast next week.
Banks, meanwhile, are doing very well. They've posted record profits this year as volatile stock markets boosted trading activity, commissions and fee revenue, while continued consumer spending supported fee and lending revenue. Analysts expect JPMorgan Chase to report a 47% profit increase and Citigroup a 61% increase when both release third-quarter earnings Tuesday. Bank of America is expected to report a 36% gain Wednesday. Morgan Stanley and several other institutions will also report during the week.
High interest rates weigh on households and businesses, but they let banks charge more for loans. The Federal Reserve recently raised its benchmark rate to cool inflation and is leaning toward another hike by the end of the year. The projected 0.6% CPI reading supports expectations that the central bank won't raise rates this month.
Why This Matters:
The week's data points to a split economy. Families face energy costs near record levels, mortgage rates at a three-year high and a housing market that's been stuck for four years. Major banks, by contrast, are on track for profit gains of 36% to 61%. Higher rates and fuel prices hit hardest for people with the least cushion: renters priced out of buying, drivers who can't avoid the pump, and workers whose paychecks lag price increases. Fed rate hikes aim to cool inflation, but they also raise borrowing costs for households and businesses while widening bank revenue. With midterms weeks away, policymakers' and regulators' choices on energy costs, housing access and financial-sector oversight will shape how that burden is shared.