US petrol prices are down, but elevated inflation continues

Inflation remained high, despite some easing in fuel prices caused by the US war on Iran.

Consumer prices in the United States increased in October more than expected, even as petrol prices fell to a four-month low after some easing of concerns about the long-term impact of the closure of the Strait of Hormuz on global markets.

In its latest report released on Tuesday, the US Department of Labor’s Bureau of Labor Statistics said the Consumer Price Index (CPI) for all items rose by 0.4 percent in October, continuing an inflationary trend since July. The average cost of shelter, as well as food, also rose in October, according to the agency.

The Labor Department’s report was higher than the Federal Reserve Bank of Cleveland, which had forecast the CPI to increase by 0.2 percent, and economists polled by FactSet, who had predicted an increase of 0.3 percent, despite the lowering pressure on energy prices.

On Monday, US President Donald Trump said that future military action against Tehran was unlikely. “Iran militarily is effectively over,” Trump said. “We’re just keeping it the status quo, and we’re doing that really at the behest of countries that are their neighbours.”

The average price of a gallon of petrol fell below $4 ($1.06 per litre) for the first time since July, according to the American Automobile Association. But the average price, currently $3.98, is still significantly higher than the $3.07 mark it was at a year ago. The average price of a gallon of petrol was $2.98 ($0.78 per litre) on February 28, when the US and Israel first struck Iran.

The economy and cost-of-living concerns were leading concerns for voters in midterm elections that were held on November 3, which saw Republicans lose control of both the US House of Representatives and the Senate. A Reuters/Ipsos poll released on the eve of the elections found that 78 percent of voters said cost-of-living was very important or the most important issue for them when considering how they would vote. Democrats, the poll found, were favoured by 43 percent of voters, compared with 32 percent who preferred Republicans to handle it.

How voters view Trump himself has also turned largely negative since the war and its impact on the economy. Only 32 percent of voters approved of his job performance, according to the Reuters/Ipsos poll, just one point above his record low of 31 percent last month.

Trump’s Republican Party was dealt major losses in the midterm elections, losing typically Republican seats in Congress in states like Texas and Kansas.

Trump himself, as well as key members of his administration like Vice President JD Vance, have acknowledged that the war on Iran played a part in those electoral losses.