rises

Economists divided on Fed rate hike as inflation creates uncertainty in run-up to US midterm elections in a tense market.

United States consumer prices jumped in September in the final inflation report before the midterm elections, increasing chances of an interest rate hike later this month.

Annual inflation accelerated to 3.7 percent, up from 3.4 percent in August. On a monthly basis, prices rose by 0.6 percent, according to the Consumer Price Index report released by the Labor Department’s Bureau of Labor Statistics (BLS) on Wednesday.

Petrol prices led the surge as tensions between the US and Iran, as well as Russia and Ukraine, weighed on global energy prices. Petrol prices rose 9.1 percent in September, accounting for more than half of the CPI monthly increase, according to the BLS. They were up 34.2 percent from the same time a year ago.

“The directionless war in Iran continues to disrupt global supply chains, driving up the prices of food and fuel,” Kyle Moore, chief economist at The Century Foundation, an economic think tank, said in a statement provided to Al Jazeera.

Petrol prices have continued to climb. The average price for a gallon of petrol is $4.33 ($1.14 per litre), compared with $4.31 a month ago, according to the American Automobile Association (AAA), which tracks daily petrol prices. Diesel prices are higher, at $6.29 per gallon (1.66 per litre), compared with $6.23 a month ago.

In a post on X, Patrick DeHaan, head of petroleum analysis for GasBuddy, said, “2026 has now seen more days with average gas prices over $4/gal than any year before: 158 days.”

Shelter costs also jumped 0.4 percent from the previous month, following a 0.3 percent increase in August. Food costs were a bright spot in the report, remaining unchanged overall.

Food away from home, including restaurant meals, rose 0.2 percent, but that increase was offset by a 0.1 percent decline in food-at-home prices, which track grocery costs.

At the grocery store, poultry prices jumped 0.7 percent, fruit and vegetable prices rose 0.5 percent, and juice prices increased 1.1 percent. However, milk prices dropped 2.1 percent and beef prices fell 0.9 percent.

Amid heavy investment in AI infrastructure, prices for computer software and accessories have jumped 28 percent from the same time last year.

“The AI boom is playing a huge part, and we have all read about the hundreds of billions being poured into data centers, AI firms, and models,” Rami Cassis, principal of Parabellum Investment, said in comments provided to Al Jazeera.

Fed pressures

The inflation data comes days before the US Federal Reserve’s interest rate decision later this month. Last month, the US central bank raised rates by 25 basis points, bringing the target range to 3.75–4.00 percent, the first hike in three years.

Economists are divided over whether the Fed will raise rates again or hold them steady. According to CME FedWatch, which tracks the likelihood of monetary policy decisions, there is a 52.9 percent chance that rates will remain in the 3.75–4.00 percent range, while a 47.1 percent chance of a quarter of a percentage point hike that would bring them to 4.00–4.25 percent.

The inflation data puts pressure on Republicans before the midterm elections on November 3. A recent Reuters/Ipsos poll showed that about 78 percent of Americans blamed US President Donald Trump’s policies for price increases.

US markets trended downward following the inflation report. The Nasdaq fell 0.8 percent and the S&P 500 dropped 0.6 percent, while the Dow Jones Industrial Average was roughly flat in midday trading.

Job growth in the United States slowed in September, falling short of economists’ expectations as the unemployment rate rose in the final jobs report before the consequential midterm elections.

The US economy added 29,000 jobs in September, according to the Labor Department’s report released on Friday, far below economists’ expectations. Dow Jones had forecast 84,000 jobs, while economists polled by Reuters said they expected 90,000 job additions.

The unemployment rate also rose by 0.1 percentage point, from 4.1 percent to 4.2 percent.

The healthcare sector led the gains, accounting for the majority of new jobs. The industry added 17,000 jobs, marking a slowdown from an average of 33,000 jobs per month over the past year. Construction added 11,000 jobs, while manufacturing added 9,000.

Financial activities, which include sectors such as commercial banking and insurance, shed 7,000 jobs.

Most other sectors were largely unchanged, including retail, oil and gas extraction, and leisure and hospitality.

“Today’s disappointing report shows the labour market is grinding to a halt, marked by slow hiring and declining real wages that leave workers with very little leverage,” Kyle Moore, chief economist at the think tank The Century Foundation, said in remarks provided to Al Jazeera.

Previous jobs reports were also revised downward. July was revised from an initial gain of 21,000 jobs to a loss of 10,000 jobs. August was revised down by 29,000 jobs, from 162,000 to 133,000.

Wages grew by 3 percent, marking the slowest annual wage increase in five years.

Friday’s jobs report caps a week of weakening economic data before the consequential midterm election on November 3.

According to an AP-NORC poll released on Thursday, 61 percent of Americans polled said the US economy is worse off now than when Trump took office in January 2025.

“When businesses are barely hiring and raises aren’t keeping up with rising prices, it’s a stalled economy – and working families are stuck in it,” Breyon Williams, chief economist for Groundwork Collaborative, an economic policy think tank, said in a statement.

Trump has been trying to change the narrative on the slumping economy. On Monday, he said in a Truth Social post that “The United States has the BEST Employment Numbers in HISTORY.”

Stalling growth

On Tuesday, the US Labor Department released the Job Openings and Labor Turnover Survey, or JOLTS report, which showed little change, suggesting what economists call a low-hire, low-fire environment. That means those who have jobs are generally not leaving for new ones, while employers are maintaining the status quo rather than expanding.

On the other hand, ADP’s private payroll report, released on Wednesday, showed that 90,000 jobs were created across the private sector. The sheer number of layoffs fell, too, according to Challenger, Gray & Christmas. The report, released Thursday, showed that employers cut more than 43,000 jobs in September, marking an 18 percent decline in layoffs from August.

Friday’s jobs report comes before the Federal Reserve’s final policy decision before the midterm election. During its two-day policy meeting on October 27-28, the central bank will decide whether to raise, cut or maintain interest rates.

The odds increasingly suggest the Fed will hold rates steady in the 3.75-4.00 percent range, according to CME FedWatch, a tool that tracks the likelihood of monetary policy decisions. The FedWatch tool indicates there is currently a 77.3 percent chance that rates will hold steady, up from 35.8 percent this time last week.

US markets are trending upward on the heels of the report. The tech-heavy Nasdaq is up 1.5 percent, the Dow Jones Industrial Average is up 0.6 percent and the S&P 500 is up 1.1 percent in midday trading.

The price of gold, which is largely considered a safe investment during times of economic uncertainty, rose 1.1 percent to $4,223.49 amid the jobs report.

As renewed fighting spreads across northern Ethiopia, the government has accused Eritrea, Sudan and Egypt of backing armed opposition groups, raising fears that the conflict could draw in regional powers.

Over the weekend, Ethiopian army chief Birhanu Jula attributed his country’s unrest to those he called Ethiopia’s “historical and contemporary adversaries”.

Birhanu accused Eritrea of being the go-between linking these external powers – including Sudan and Egypt, which he explicitly named – with armed groups inside Ethiopia.

Eritrea, Sudan and Egypt have all rejected the accusations. Speaking to Al Jazeera, Egyptian Foreign Ministry spokesperson Nader Zaki said that Egypt’s foreign policy was founded on “full respect for the sovereignty, unity and territorial integrity of states, and noninterference in the internal affairs of other countries”.

Zaki added that Egypt “is fully committed to the rules of international law and the Charter of the United Nations, and rejects any practices that would undermine regional security and stability”.

Major-General Samir Farag, the former head of the Egyptian Armed Forces’ Morale Affairs Department, also told Al Jazeera that the accusations against Egypt were false. “It has not been Egypt’s policy to interfere in the internal affairs of any state in the region,” he said.

Sudan’s military also dismissed the accusations as “baseless” and levelled its own charge of destabilising behaviour at Ethiopia, accusing it of supporting the paramilitary Rapid Support Forces (RSF), which has been fighting the Sudanese Armed Forces since 2023. Ethiopia has denied those allegations.

Troubled relations

Ethiopia’s relations with the countries it has accused have already been strained by other disputes that predate the latest fighting.

Relations between Cairo and Addis Ababa have remained tense as a longstanding dispute over the Grand Ethiopian Renaissance Dam (GERD) remains unresolved. Competition between the two has increasingly extended to regional security, the Red Sea and the Horn of Africa.

Sudan’s relations with Ethiopia are similarly troubled. Since the outbreak of the Sudanese civil war, Khartoum has accused Addis Ababa of providing training, supplies and the use of Ethiopian territory to the RSF.

Eritrea had fought alongside Ethiopia against rebel groups in the latter’s Tigray region during a war between 2020 and 2022, but relations between the two neighbours have since soured, with Eritrea alarmed by Ethiopia’s attempts to gain access to the Red Sea.

Against that background, some analysts and Ethiopian opposition figures say that Addis Ababa is pointing the finger at foreign conspiracies in a bid to rally support behind its national army.

Mohamed Selim, deputy chair of the Egyptian parliament’s African Affairs Committee, told Al Jazeera that he believes the accusations were an attempt to shift attention from Ethiopia’s domestic problems by creating an external enemy and seeking to unify the internal front.

Amani al-Tawil, director of the Africa Programme at the Al-Ahram Centre for Political and Strategic Studies, similarly described the accusations as “an understandable attempt to escape from internal crises”.

She questioned why Egypt would choose this moment to intervene militarily in Ethiopia, given the two have been in dispute over GERD since 2011.

Al-Tawil said the breadth of the new opposition alliance in Ethiopia – seven groups representing disparate ethnic groups and regions announced the coalition last week – presented a challenge to Addis Ababa.

Spillover concerns

The renewed fighting in Ethiopia has spread across Tigray and into neighbouring Amhara and Afar.

Mohammed Hussein, the chairman of the Prosperity Party Afar Region Branch Office – the ruling party in Ethiopia’s Afar region – told Al Jazeera that the three regions together have a population of more than 38 million, according to his estimate, and include areas near the borders with Djibouti and Eritrea, raising fears of a regional war.

Ammar Arki, a writer focusing on Horn of Africa affairs, told Al Jazeera that Ethiopia had, at various stages, blamed Sudan, Egypt and Eritrea for contributing to instability inside Ethiopia.

He said the latest accusations could be interpreted as an attempt to redirect some domestic attention towards an external threat and build support around the federal government.

But Arki warned that the longer Addis Ababa continued to explain its internal crisis in terms of an “external conspiracy”, particularly if neighbouring states responded in the same way, the greater the risk that Ethiopia’s conflict could move beyond Ethiopia’s borders and become regional.

50,000 frontline staff to receive a jab for a different Ebola strain, with 20,000 enrolled in a one-year clinical trial.

Health workers in parts of the Democratic Republic of the Congo (DRC) have begun to receive a vaccine that many hope will provide a level of protection against the Ebola virus.

The vaccine rollout started on Saturday in Bunia, the capital of Ituri province in the northeastern DRC. Ituri is the epicentre of the fastest-growing outbreak of Ebola in history.

The provincial governor, Major-General Gaby Kasongo Mulumba, said health workers there “are particularly exposed and deeply involved in the response”.

The operation, backed by the World Health Organization and Doctors Without Borders, known by its French initials MSF, will also target North Kivu, where cases have been rising sharply, health authorities said.

Some 50,000 health and other frontline workers will be injected with the Ervebo vaccine, which was developed for use against the more common Zaire strain.

Its effectiveness against the current Ebola strain caused by the Bundibugyo virus will be monitored in 20,000 recipients for up to one year.

Clinical trials are ongoing to find a licensed vaccine for the latest outbreak, which has no licensed vaccine or proven treatment.

“We don’t know to what degree it might be effective against the Bundibugyo strain,” Steve Ahuka, a Congolese official who is part of the health task force against the Ebola outbreak, said.

Dr Jeannot Elua said at a health facility in Bunia the vaccine was “beneficial”.

“We healthcare workers don’t really have a choice. We are going to receive it,” he told the Associated Press news agency. “Some people here had already received the previous vaccine. I received it myself, because it was mandatory.”

WHO experts have said that early data on the Ervebo vaccine, notably from animal trials, suggested it could offer some protection in the current outbreak.

The virus has killed at least 3,639 and infected some 7,541 people since May. Some 1,823 people have recovered, according to the latest figures from local authorities.

The WHO said in August that 70,000 doses of Ervebo were approved for use in the DRC.

The vaccine is being used under a compassionate-use programme, which allows a medical product to be used in a serious disease situation even though it has not been specifically approved for that particular use.

While WHO officials have cited “encouraging signs” that transmission may be slowing, MSF warned on Friday that there is no clear evidence the epidemic is coming under control.

Bank of Japan raises benchmark interest rate from 1 to 1.25 percent, pledging to help counter inflation risks.

The Bank of Japan (BoJ) has raised interest rates by 0.25 to 1.25 percent, pushing borrowing costs to their highest level in 31 years, amid rising inflation and wages, and pressure from Washington.

The move on Friday marked the first hike since June, and takes interest rates closer to levels the BoJ deems neutral to the economy, marking another step away from decades of ultra-low rates that cemented the yen’s status as a cheap global funding currency.

Japan is grappling to contain inflation, which is being driven by factors including rising energy prices, global supply pressures and domestic inflation exceeding the 2 percent target.

Core consumer inflation held steady near the target in August, data showed on Friday, as companies continued to pass on rising costs for a wide range of food and grocery items.

The country also faced a “slow-moving demographic shock” with a shrinking labour pool lifting wages, a structural factor that ⁠cannot be dismissed as temporary, BoJ Executive Director Koji Nakamura said on Monday.

The Federal Reserve’s rate hike on Wednesday, and the prospect of another one later this year, have added pressure on the BoJ to keep pace.

Further widening of the United States-Japan rate gap risks weakening the yen and lifting inflation through higher import costs, analysts told the Reuters news agency.

Its policy rate also remains lower than the European Central Bank, which raised its key rate to 2.5 percent last week.

Such pressure could affect the tone of BoJ Governor Kazuo Ueda’s post-meeting briefing, which will be closely watched by markets for clues on the timing and pace of further increases.