US inflation hits hardest in years as Iran war drives petrol prices to gut American consumers

America's producer prices surged 1.3% in September — the biggest monthly jump in four and a half years — as the US-Israeli war with Iran keeps oil prices elevated and inflation broadens well beyond energy products. Retail sales rose 0.8%, beating forecasts, but strip out petrol stations and the real gain was just 0.2%. Inflation-adjusted wages fell again, and Oxford Economics now expects the Federal Reserve to raise rates before Christmas.

Petrol station takings surged 6.4% in September as the average gallon of regular gasoline hit $4.33, squeezing lower-income households hardest.

Oxford Economics chief US economist Michael Pearce warned the September retail headline was 'almost entirely due to rising gasoline prices' and expects consumer spending to lose momentum into the holiday season.

Producer prices have now soared 6.3% over twelve months — the sharpest annual rise since December 2022 — with energy costs up 10.8% and gasoline up 20.3%.