The damage Trump has inflicted on America is spreading

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With less than three weeks to go before the US midterm elections, the latest inflation data shows that the US inflation rate is not just accelerating, but that the impact on prices is broadening.

Given that the core issue in the election is affordability , the headline rise in the rate in September of 0.6 per cent – a material increase on the 0.4 per cent rise in August – and the year-on-year increase in prices of 3.7 per cent (3.4 per cent previously) couldn’t have come at a worse time for Donald Trump and the Republicans.

Economists had expected the rate to nudge up, not generate the biggest rise since April.

While the biggest contributor to the swelling inflation rate was energy prices, which accounted for more than half the overall rise, even on a “core” basis, which excludes energy and food costs, there was a 0.3 per cent increase in September and a 2.6 per cent increase from September last year.

The disparity between the headline and core rates suggests something quite unsettling for Trump; the Republicans facing election and Americans more generally: it’s not just the war in Iran and higher oil prices driving higher consumer prices.

Trump’s war in the Middle East has driven the oil price up from around $US70 a barrel to more than $US106 a barrel, with flow-on effects to the prices of gasoline and diesel, which have soared by 45 per cent and 70 per cent respectively from the levels before the February 28 attacks on Iran.

It appears that those increases in energy costs are now feeding into the wider economy as transport, travel, heating costs are rising.

They have yet to hit groceries, where prices rose only 1.8 per cent last month, but US food companies are saying increasing costs in the agricultural sector and the impact on their transport costs of the huge price spike for diesel is inevitably going to result in higher prices.

Even if the war Iran were to end soon, the shortages of diesel caused by the damage has done to Middle Eastern refinery infrastructure and the success Ukraine has had in targeting Russian refineries mean, the International Energy Agency said on Wednesday, that prices could start rising again. The world will remain short of diesel until the middle of next year, it said.

The IEA also said that the controversial deal Trump announced this week to ease sanctions on Russia and allow it to export diesel was “unlikely to materially affect” the amount of the fuel in the market – because of Russia’s dearth of operational refineries.

In any event, the volumes involved in that deal are too small to make much of a difference to prices. Trump has, unsurprisingly, overstated its potential.

While energy might be the biggest contributor to the lift in the inflation rate, it’s not, as indicated, the only one.

Prices for computers and related equipment are up almost 10 per cent over the past 12 months and software prices more than 28 per cent. That’s attributable to the boom in the artificial intelligence sector.