The latest data from the U.S. Department of Labor shows that the Consumer Price Index (CPI) rose 3.7% year-on-year in September 2026. Although this is far below the peak in 2022, the cumulative increase has profoundly changed household finances and voter sentiment. With the November midterm elections approaching, the cumulative effect of inflation is becoming a core point of contention regarding the Republican Party's performance in power.

Cumulative increases and daily expenses pressure

Over the past six years, overall prices, as measured by the Consumer Price Index (CPI), have risen by more than 29%, roughly three times the rate of increase in the previous six years. Everyday goods prices are about 30% higher than in 2020, the average price of a new car is close to $50,600, 30-year fixed mortgage rates are above 7.4%, and expenses for housing, childcare, car maintenance, and veterinary services have all increased faster than average hourly wages. Out-of-pocket healthcare costs have increased by about 47% since 2020. While prices for some food items, such as eggs and butter, have fallen somewhat in the past year, energy costs have recently surged and are beginning to spread to a wider range of sectors. Economists point out that voters are more focused on changes in price benchmarks accumulated over many years than on single-month data. Georgetown University Business School professor Stephen Weymouth stated that inflation is making voters impatient and anxious. This "new normal," where a gallon of milk still costs around $5, continues to fuel discontent.

Lagging wage growth and erosion of purchasing power

Over the past six years, the average price increase has outpaced wage growth. In the last three months, the inflation rate has consistently exceeded the growth rate of average hourly wages. In September 2026, nominal average hourly wages increased by only 3.0% year-on-year, while the Consumer Price Index rose by 3.7%, and real hourly wages decreased by 0.7% year-on-year. Many employers have raised wages in line with inflation, but Stanford University economics professor Neil Mahoney points out that employees often view raises as performance rewards, and feel a loss when grocery store price increases erode their real income. A Century Foundation report shows that more than half of workers' wage increases are used to pay off debt, further eroding disposable income.

Strong consumption diverges from confidence

Household spending continued to grow in the 12 months ending in August, with the S&P 500 rising about 12.8% to 14% year-to-date, and the unemployment rate remaining low. However, the University of Michigan Consumer Sentiment Index fell to a preliminary reading of 46.3 in October, a five-month low, with the current economic conditions sub-index hitting a record low. Purdue University economist Michael Weber pointed out that consumers are more likely to notice price increases than price decreases when comparing prices to those from years ago, which explains the coexistence of declining confidence and resilient spending.

Political impact of midterm elections

Inflation has historically come at a political cost to those in power. High prices in 2022 and 2024 were a weakness for the Democrats, and now the Trump administration must address the reality of an average car costing around $50,000 and gasoline around $60. Weymouth argues that voters easily link policies to prices, and the fact that tariffs initially increased prices for some goods, only to see a slight decrease after their removal, reinforces this association. A Wall Street Journal poll shows that 60% of respondents believe Trump's policies have worsened the economy. The White House spokesperson, however, emphasizes lowering prescription drug prices and creating over 1 million private sector jobs, claiming to be cleaning up the mess left by previous administrations' failed policies. The impact of inflation is not uniform. Data from the Federal Reserve Bank of New York shows that this year's inflation has significantly impacted the lowest 40% of earners more than the highest 20%, with energy prices having a greater impact on low-income families. Republicans emphasize that inflation is already far below previous levels, but Weber cautions that the slogan "price increases are slowing" may not be effective because consumers don't perceive prices in that way.

Editor's Summary

Six-year cumulative inflation exceeding 29%, coupled with a recent year-over-year reading of 3.7%, along with declining real purchasing power of wages and high borrowing costs, forms the core backdrop to current American voter sentiment. While consumer spending and stock market performance remain resilient, confidence polls and opinion polls have shown that accumulated price pressures are translating into political risk. The midterm election outcome will depend in part on how different income groups actually feel about financial pressures, and how both parties respond to voters' intuitive experiences with daily spending. The political cost of inflation often depends not on the latest year-over-year figures, but on whether the price benchmark in household memory has been permanently inflated.

Frequently Asked Questions

Q: Why are voters still dissatisfied with prices even though the year-on-year inflation rate has fallen from over 9% in 2022 to 3.7%? A: Voters are focused on the cumulative price level, not the rate of change in a single month or year-on-year. Overall prices have risen by over 29% in the past six years, with everyday goods about 30% higher than in 2020. Prices for new cars, childcare, beef, and paper towels have risen sharply. Consumers often compare current prices to benchmarks from years ago; a gallon of milk priced at $5 still elicits surprise and anger. Economists point out that adapting to new price benchmarks takes years, and short-term slowdowns are unlikely to quickly reverse the cumulative erosion effect. The recent rise in energy prices has further reinforced this perception, making voters more likely to blame the current administration when voting. Q: Why has wage growth failed to alleviate household financial pressure? A: Over the past six years, the average price increase has exceeded wage growth, and in the last three months, inflation has consistently outpaced hourly wage growth. In September 2026, nominal hourly wages are projected to increase by 3.0% year-on-year, CPI by 3.7%, and real hourly wages by 0.7%. Many pay rises are seen as personal rewards by employees, and they feel a sense of loss when grocery store price increases offset income growth. Large expenses such as housing, postage, childcare, and car maintenance have increased faster than hourly wages, and out-of-pocket medical expenses have risen by about 47%. Debt burdens further erode the pay rise bonus; a Century Foundation report shows that more than half of pay rise income goes towards debt repayment, resulting in limited improvement in real disposable income. Q: Why does strong consumer spending coexist with declining consumer confidence? A: Household spending continued to grow in the 12 months ending in August, with the S&P 500 rising by about 12.8% to 14% year-to-date, and unemployment remaining low. However, the University of Michigan's preliminary consumer confidence index fell to 46.3 in October, with the current conditions sub-index hitting a record low. Consumers tend to compare prices with earlier memories, and price increases are more noticeable than price decreases. Purdue University economists point out that many people underestimate what they actually pay when recalling prices from a year ago. Persistent inflation is squeezing disposable income; even if overall spending remains stable, confidence weakens due to daily price pressures, creating a situation where spending resilience coexists with pessimistic sentiment. Q: How does inflation affect low-income and high-income groups differently? A: Data from the Federal Reserve Bank of New York shows that this year's inflation has had a significantly greater impact on the bottom 40% of earners than on the top 20%. Energy prices have a greater impact on low-income families because a larger proportion of their wages is spent on necessities such as gasoline. Increased fixed expenses such as housing and childcare have also exacerbated the burden on low- and middle-income families. High-income groups can buffer through asset appreciation or adjusting their consumption patterns, while low-income earners are more sensitive to price changes, and their financial pressure translates more directly into political discontent, potentially influencing the voting tendencies of different voter groups in the midterm elections. Q: How has the Trump administration responded to the political risks of inflation, and how have voters attributed them? A: The White House emphasizes lowering prescription drug prices and creating over 1 million private sector jobs, claiming it is cleaning up the mess left by previous policies. Republicans point out that inflation is already far below its previous peak. However, polls show that 60% of respondents believe Trump's policies have worsened the economy, and voters are likely to link tariffs and other policies to rising prices of goods like bananas. A Georgetown University professor points out that inflation is causing voter anxiety, and Purdue University experts warn that the "slowing inflation" slogan may not be effective. The ultimate impact depends on which groups bear the greatest financial pressure and whether the campaigns of both parties can effectively address everyday price perceptions. Q: What impact will this have on the US dollar index? September's CPI rose 3.7% year-on-year to 2.6%, both higher than expected, with energy prices significantly driving the increase. The market quickly raised expectations for further tightening by the Federal Reserve or a delay in rate cuts, leading to rising US Treasury yields and attracting capital back to dollar assets, directly supporting a stronger dollar index. In the short term, the stickiness of inflation reinforces the logic of "higher interest rates for longer," making the dollar index more likely to rise than fall. However, with the midterm elections approaching, voter dissatisfaction with prices may exacerbate policy uncertainty (tariffs, fiscal path). If the market interprets this as increased political risk, the interplay between the dollar's safe-haven appeal and policy risk will increase volatility. Furthermore, some Fed officials have hinted that rate hikes are not urgent, and the Fed is likely to hold rates steady in October, limiting the short-term upside potential of the dollar index. Overall, the data itself is favorable for the dollar, but the election results and subsequent policy direction will be the dominant factors in the next stage. At 10:50 Beijing time, the dollar index is currently at 94.01.