Inflation Rises to 3.6% as Cost of Living Concerns Grow Ahead of Midterm Elections
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Published by: The Seattle Times
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October 29, 2026: Correction October 29, 2026: The reported 12.7% third-quarter growth was in total nonresidential fixed investment, not exclusively AI investment. Removed an unsupported six-year superlative. Verified against BEA third-quarter GDP and September PCE releases and an independently written industry analysis. Original audited copy retained with a public correction record; both original syndicated sources remain linked.
U.S. economic growth surged to 3.4% in the third quarter of 2026, driven by strong consumer spending and AI infrastructure investment, according to the Commerce Department. Consumer spending rose 3.8% annually, with nonresidential fixed investment up 12.7%, a broad category that includes but is not limited to AI-related spending.
However, inflation rose to 3.6% in September from a year earlier, up from 3.4% in August, with monthly price increases at 0.5%, the highest since May. Rising energy prices, fueled by Middle East tensions, contributed significantly, with oil prices exceeding $100 per barrel.
Prices also increased in services such as shipping, hotel rooms, and utilities, indicating inflation is spreading beyond energy. After-tax incomes rose only 1% year-over-year, and inflation-adjusted spending increased by 2.5%. The savings rate dropped to 3.8% in September, its lowest level in four years.
Ksenia Bushmeneva of TD Bank noted in a commentary that 'price pressures are showing signs of heating up' and that real income failed to grow for two consecutive months. This data was released on October 29, 2026, just days before the midterm elections, where cost of living concerns dominate public discourse.
The Federal Reserve closely monitors this inflation gauge, which has accelerated in recent months.
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