Prices Outpace Wage Growth As Inflation Shoots to 3.7%
Gas is up 34% and diesel passed $6 a gallon, so real hourly pay fell 0.7% in a year, according to the Bureau of Labor Statistics.
Prices in the U.S. rose 3.7% in the year ending in September, while average hourly pay rose 3.0%, according to Bureau of Labor Statistics data released October 14. After inflation, an hour of work now buys 0.7% less than it did a year ago.
Fuel did most of the damage. The gasoline index jumped 9.1% in September alone, which the BLS says accounted for more than half of the month's increase. Gasoline is up 34.2% from a year ago, and energy overall is up 20.4%.
Why prices jumped
CBS News tied the energy spike to the war in Iran and Russia's war with Ukraine. "The CPI was clearly hot, and there aren't many ways to sugarcoat it," Adam Crisafulli, head of the research firm Vital Knowledge, told CBS News.
Strip out food and energy and the picture is calmer. So-called core inflation rose 2.6% over the year. That means the pain is concentrated in the things workers can't skip: getting to work, heating a home, and getting home for the holidays (airline fares are up 22.4%).
Diesel passed $6 a gallon
Diesel averaged $6.18 a gallon nationwide in the week of October 12, according to the U.S. Energy Information Administration. That's about $2.51 more than a year ago. The BLS's own September average was $6.33, up from $3.73 in September 2025, a 70% jump. In California, diesel averaged $8.09, per Department of Energy figures reported by Transport Topics.
You may not buy diesel, but you pay for it. It fuels the trucks, trains, tractors, and delivery vans that move nearly everything you buy. When it costs more to haul food and goods, those costs tend to show up on store shelves later. "We really are operating in sort of an unprecedented environment, in terms of diesel fuel," Zac Rogers, an associate professor of operations and supply chain management at Colorado State University, told Logistics Management.
What things cost now
Here's what the BLS found shoppers paid on average, across U.S. cities:
| Item | Sept. 2025 | Sept. 2026 | Change |
|---|---|---|---|
| Diesel (gallon) | $3.73 | $6.33 | +70% |
| Regular gas (gallon) | $3.34 | $4.48 | +34% |
| Heating oil (gallon) | $3.59 | $5.92 | +65% |
| Ground beef (lb) | $6.32 | $6.79 | +7% |
| Spaghetti and macaroni (lb) | $1.21 | $1.38 | +14% |
| Coffee (lb) | $9.14 | $9.33 | +2% |
| Electricity (kWh) | $0.188 | $0.196 | +4% |
| Whole milk (gallon) | $4.13 | $4.11 | -1% |
| Bacon (lb) | $7.29 | $6.76 | -7% |
| Eggs (dozen) | $3.49 | $2.27 | -35% |
Groceries are a mixed bag. Food at home rose just 1.8% over the year. Eggs fell sharply as supplies recovered from bird flu, ABC News reported, while beef, pasta, and coffee kept climbing.
The three-year view
Over three years, workers are still slightly ahead, but the last year took a real bite. Here's how prices moved compared with pay:
| Past year | Past 3 years | |
|---|---|---|
| All prices | +3.7% | +9.5% |
| Groceries (food at home) | +1.8% | +5.9% |
| Gasoline | +34.2% | +13.1% |
| Electricity | +4.4% | +13.7% |
| Rent | +2.8% | +11.4% |
| Average hourly pay | +3.0% | +11.6% |
Measured in constant dollars, average hourly pay rose from $11.02 in September 2023 to $11.32 in September 2025, a 2.7% gain. It has since slipped to $11.24. This past year wiped out more than a quarter of that gain.
Who feels it most
People who drive for a living are taking the hardest hit: truckers, delivery and rideshare drivers, contractors, and anyone with a long commute. So are households that heat with oil, which is up 74% from a year ago on the BLS index.
Hourly and clerical workers are also paying more than the headline number suggests. The price index that tracks their households (CPI-W) rose 3.9% over the year.
Economists warned the energy shock could spread. "People care about food and energy. That's what they feel every day," Sung Won Sohn, a finance and economics professor at Loyola Marymount University, told Reuters before the report came out.
What comes next
The BLS releases October's inflation numbers on November 10. Whether diesel keeps falling from its September peak will go a long way toward deciding whether grocery prices follow fuel up.
In the meantime, two practical steps. If you drive your own car for work, ask whether your employer will raise its mileage reimbursement to match today's gas prices. And if a raise conversation is coming up, bring the numbers: prices are up 3.7% in a year, and average pay is up 3.0%. A raise below inflation is a pay cut.
Sources
- Consumer Price Index, September 2026 (U.S. Bureau of Labor Statistics)
- CPI detailed tables, September 2026 (BLS)
- Real Earnings, September 2026 (BLS)
- Real Earnings, September 2023 (BLS)
- Consumer Price Index, September 2023 (BLS)
- Average Retail Food and Energy Prices, U.S. City Average (BLS)
- U.S. diesel sales price, weekly (EIA via FRED)
- National diesel average falls for third straight week (Logistics Management)
- 2026 DOE regional diesel fuel prices (Transport Topics)
- Inflation surged in September as U.S. energy costs jumped (CBS News via Yahoo Finance)
- High gasoline prices expected to boost US consumer inflation in September (Reuters via Investing.com)
- Which grocery prices are rising the fastest and which are falling? (ABC News via WDBO)
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