Gas Costs $4, Diesel $6, and Washington Calls It Good News

The average gallon of gas now costs more than $4. Diesel costs more than $6. Kevin Hassett, director of the National Economic Council, looked at the September inflation report and said, “There’s a whole bunch of good news.”

I have heard that sentence before. Usually it arrives just after a number goes the wrong way.

The Bureau of Labor Statistics said consumer prices rose 3.7 percent in September from a year earlier. That was up from 3.4 percent in August. It was the highest annual CPI reading since May, when inflation stood at 4.2 percent.

Hassett told NewsNation’s Hannah Brandt, “Food and drug prices are coming down.” He is right on the narrow point. Food prices held steady from August to September. Prescription drug prices fell 1.2 percent.

But a household does not buy a category called “everything except fuel.” It buys gasoline, heat, groceries, rent, and whatever is left after that. The September report put energy prices up 5.2 percent in one month. Energy was up 20.4 percent over the year.

Gasoline rose 9.1 percent from August to September. The BLS said that increase accounted for more than half of the monthly rise in all consumer prices. That is not a rounding error. That is the report.

The part that should worry people

Core inflation, which leaves out food and energy, rose to 2.6 percent annually in September from 2.4 percent in August. The headline number can be blamed on oil. Core inflation is harder to wave away.

Heather Long called it plainly: “It was a tough report overall.” She added, “Inflation feels more broad-based now.” That is the sentence worth carrying around.

The Iran war has pushed fuel prices higher. Gas and diesel above $4 and $6 per gallon are not an abstraction. Diesel moves food, freight, farm equipment, and store inventories. When diesel stays expensive, the bill does not stay at the pump. It travels.

Real average hourly earnings fell 0.5 percent from August. Prices rose faster than pay. That is the arithmetic people feel before anyone explains it to them.

The political version

The White House prefers a different cut of the data. Hassett framed the energy jump as temporary and pointed to stable food and lower drug prices. Those facts are real. So is the fact that annual inflation accelerated.

Matthew Middleton took the other side of the political argument: “Democrats pretend to care about affordability.” That is a campaign line, not an explanation of the CPI. Both parties have learned to treat inflation as a message problem before treating it as a household problem.

The record is not encouraging. Inflation reached 9.1 percent in June 2022, a 40-year high. It was 2.9 percent in December 2024. Now it is 3.7 percent and moving up again.

I remember 2008. Officials explained away rising commodity costs as temporary. Some were. The damage to household budgets was not. I remember 2000 too, when the comfortable story lasted until it did not.

What is known, and what is not

What is documented is straightforward. CPI rose 3.7 percent year over year in September. Energy rose 5.2 percent monthly and 20.4 percent annually. Gas rose 9.1 percent monthly. Core inflation rose to 2.6 percent. Real hourly earnings fell 0.5 percent.

What Hassett claims is that the energy surge is temporary and that the underlying report contains good news. That may prove true. Food and prescription drugs did behave better than energy.

What remains unknown is how long the Iran war keeps fuel elevated, whether diesel costs pass through to broader prices, and whether core inflation keeps drifting higher. Those are not details. They are the difference between one bad month and a renewed problem.

A “whole bunch of good news” is a strange thing to say when the gas pump asks for four dollars and the diesel pump asks for six. The report did contain a few better numbers. It also contained a 3.7 percent inflation rate, higher energy bills, and paychecks losing ground.

Count the money twice. Then decide which part is the news.