Analysis by CNN's David Goldman.
(CNN) - US President Donald Trump and Republicans have just received the worst news about inflation ahead of the midterm elections. Prices rose more than expected in September.
This news came as no surprise to American voters; Opinion polls have shown overwhelming anger at the persistently high costs of living since the Covid pandemic, which has been exacerbated this year by Trump's policies, including tariffs and, above all, the war with Iran.
In an attempt to alleviate some of the burdens resulting from high prices, the Trump administration resorted to exhausting all the solutions and methods available at its disposal.
More than a month ago, the US Navy began a high-risk effort to assist tankers transporting Gulf oil through the Strait of Hormuz.
In a desperate and risky move, Trump last week announced a controversial agreement to lift some sanctions on Russia, with the aim of importing a relatively small amount of Russian diesel.
Iran and its Houthi allies are currently working to undermine both processes; The escalation of attacks on oil tankers and oil infrastructure over the past week has led to a rise in oil and diesel prices.
These disturbances also caused a sharp decline in transit traffic through the Straits of Hormuz and Bab al-Mandab, after it had largely recovered to pre-war levels.
It was not possible for the Trump administration to solve the inflation problem in the month before the midterm elections, but this week its latest effort - which was aimed at achieving positive results on prices - hit an absolutely insurmountable obstacle.
Inflation
The Consumer Price Index released on Wednesday revealed a familiar scenario: Inflation continued to rise in September, driven primarily by a big jump in energy costs.
Gasoline prices rose 9.1% during the month, ending September at a level more than 34% higher than in the same period last year. Fuel oil prices also rose by 15.3% last month, and recorded a jump of more than 74% over the past year.
These high costs began to extend to other sectors of the economy. As my colleague Matt Egan pointed out on Tuesday, the war in Iran costs the average American family an additional $2,000 in financial burdens, according to data from Moody’s Analytics.
What is particularly worrying in the inflation report issued on Wednesday is the sudden rise again in housing and rent costs. These are factors that contribute significantly to inflation rates, and they witnessed a slowdown during the spring and summer.
The prices of services as a whole recorded an increase of 0.4% during the month. These prices usually tend to rise when entities such as yoga studios, lawn care companies, and others increase the fees charged to their clients to compensate for their higher operating costs.
Although the rise in the prices of these services may be merely an indirect repercussions of the war in Iran, economists are concerned when they rise, given that they are usually characterized by “rigidity” (that is, they do not decrease easily).
To put it bluntly: When was the last time the nursery your children attend lowered their prices?
The US economy remains strong, and consumers continue to spend despite rising prices. However, rising inflation has led to higher bond yields and interest rates set by the Federal Reserve, raising borrowing costs and making housing more difficult to afford.
Strait of Hormuz
Iran understands all of the above; She knows the extent of the political pressure that Trump and his Republican Party are facing, and she is well aware of the nature of the current timing.
After September, which was characterized by relative calm, at least 18 ships were subjected to attacks in the Middle East and its surroundings during the past two weeks, according to data from Kpler, a company specialized in tracking maritime traffic.
On Tuesday, the Houthi group, allied to Iran, appeared to have targeted the headquarters of Aramco, the state-owned Saudi oil giant.
In this regard, Matt Smith, an analyst at Kpler, said: “It appears that Iran is trying to keep oil prices high ahead of the midterm elections, and the best way to achieve this is to intensify attacks, whether launched directly by Iran or carried out through the Houthis.”
Thus, the ever-changing narrative about who controls the Strait of Hormuz has changed again.
The complex operation carried out by the “shadow fleets” - protected by sea - to transport Gulf oil through the strait and unload it into other tankers in the Gulf of Oman has achieved tremendous success. Only a few weeks ago, oil transit exiting the Strait of Hormuz had recovered to almost return to pre-war levels.
However, oil and fuel transit through the strait has decreased over the past seven days, reaching only 54% of pre-war levels, according to Kpler data.
In this context, Dan Pickering, founder and chief investment officer of Pickering Energy Partners, said that the Iranian response should not come as a surprise to anyone.
He added: "At a time when the United States is bragging about its success in pumping more crude oil to global markets, it seems as if it is wearing a big banner on its back that says (Kick me)."
He continued: "Iran launches attacks targeting almost everyone, and at the same time, the Houthis - Iran's proxies - launch attacks on the Kingdom of Saudi Arabia that achieve tangible and influential results."
Recent Houthi attacks on Saudi infrastructure have escalated the intensity and risks of the war. Although the oil market has largely escaped a crisis following a successful (albeit fixable) attack targeting the vital East-West pipeline in Saudi Arabia, the recent attacks confirm that the conflict will not subside anytime soon.
It remains undecided which party will emerge victorious in the end; The US Navy may regain its superiority again, or the US administration may devise creative ways to pump more diesel fuel to the market.
Meanwhile, the loser is clear: the American consumer; Who will issue his judgment on the economic situation after three weeks, when he casts his vote in the midterm elections.
