Brent crude is down about a third since mid-October on expectations the Iran war is ending, but diesel, freight and fertiliser costs have not fallen in tandem, delaying relief for US consumer prices through 2027. October’s Consumer Price Index rose 0.4% versus a 0.3% forecast, while core CPI increased 0.3% for a third straight month. Annual comparisons are largely missing because the Bureau of Labor Statistics did not collect prices during the October 2025 shutdown; estimates put headline inflation at 3.9%–4% and core at 2.6%–2.8%, up from 2.4% and 2.5% in February before the war. Core has been accelerating, running at about 3.8% over three months, with services outside energy at 4.2%, while core PCE excluding food and energy rose 3.1% through September; more than 70% of its service categories are increasing at 3% or more.
Energy Prices And Their Impact On Inflation
Cheaper petrol may pull down the headline rate mechanically: petrol is about 4% of CPI, and the national average rose from $2.87 a gallon in early February to $4.15 in the week of November 2, with the index up 1% in October even as pump prices fell 0.7%. Diesel remains $6.29 a gallon, up 71% since early February and under 4% below its September record, while distillate stocks are about 13% below the five-year seasonal average; refinery losses, rather than crude, are driving refined-fuel tightness. In September PPI, diesel was up 115% year on year and jet fuel 104%, with truckload freight up 17.9% and scheduled airfares 19.5%; airline fares rose 22.4% year on year to September, and in October full-service restaurant prices increased 0.7% while moving and freight services jumped 3%.
Food, Freight, And Broader Inflation Trends
Food inflation is building: food at home rose 0.4% in October, beef 0.9% and dairy 0.6%, while nitrogen fertiliser PPI was up 19% year on year in September; about 29% of global urea trade normally transits the Strait of Hormuz. The Fed lifted rates to 3.75%–4.00% in September and held in October, with a December 9 decision pending; markets imply 2.25% average inflation over five years, even as core CPI at 0.3% a month would take annualised inflation to roughly 3.6% by mid-2027.
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