The renewed rise in American inflation exposes the fragility of economic stability and threatens President Donald Trump’s promise to make life more affordable. With the midterm elections approaching, rising household expenses could become a significant political liability. More importantly, the latest figures highlight how geopolitical conflict and domestic trade policies can undermine efforts to control prices. Annual inflation climbed to 3.7 per cent in September from 3.4 per cent in August, driven largely by surging energy costs following disruptions to West Asian supplies amid the US-Israel conflict with Iran.

Higher fuel prices affect far more than motorists. They raise transportation, manufacturing and distribution costs, potentially spreading inflation throughout the economy. A sustained inflationary spiral is not inevitable. Core inflation, which excludes food and energy, remains at 2.6 per cent, while food inflation is comparatively moderate. However, if elevated energy costs persist, businesses may pass additional expenses to consumers, gradually extending price pressures to everyday necessities. The Federal Reserve must therefore distinguish between a temporary supply shock and inflation that becomes entrenched. Trump’s tariff policy adds another complication.........

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