Inflation's ticking time bomb: The Fed eyes another hike as gas and heating oil prices spike — are you ready for what's coming?

A quick glance at the CPI’s categories reveals the obvious problem area: gasoline.​

As the BLS noted, September’s 9.1% rise in gasoline prices represents “over half of the monthly all items increase.” Fuel oil used for heating homes spiked even more, up 15.3% last month.

Looking at the past 12 months, gasoline prices are up 34.2%, and fuel oil is up 74.2%. Overall, energy rose 5.2% in September and 20.4% over the past year.

These higher-than-average fuel costs come as no surprise following the outbreak of the war in Iran. At the time of writing, AAA estimates the national average price for a gallon of gas is hovering around $4.33.​

Energy’s price jump is bad news for Trump

​Politically speaking, these hot inflation figures won’t help the White House’s image with average Americans.​

Survey after survey shows more voters blame President Trump for the economy’s recent ills. For instance, in a recent Reuters/Ipsos poll, 78% of Americans now say the president’s policies directly caused the surging cost of living.​

And there appears to be little President Trump could do to change people’s minds ahead of the November midterms. Even if he ended the war in Iran or brought gas down by $1, most Democrats and undecided voters say they wouldn’t vote Republican in a POLITICO survey.

​Back in September, Quinnipiac University found this is the Democrats’ race to lose. With 49% of voters saying they want Democrats to take control of the House, compared to just 38% favoring Republicans, they lead the GOP by a spread of 11 points.

​The recent CPI data also lowers the odds the Fed will start cutting interest rates to Trump’s preferred 1% range anytime soon. If anything, September’s CPI print puts more pressure on Fed leaders to hike rates as the trend strays further from its 2% annual inflation goal.

Although CME Group’s FedWatch tool, which fluctuates frequently, currently shows an 85% chance of no rate change at the Oct. 28 Fed meeting, there’s still roughly a 15% chance of a 25-basis-point bump. Even if there’s no rate hike at October’s meeting, the Federal Reserve Bank of Atlanta shows an over 90% chance of another 25-basis-point hike by December’s meeting.

​

Got ‘gas pains?’ Give your wallet a tune-up

Of course, average Americans can’t control geopolitics or grab a seat at the next Fed meeting. However, there are a few practical ways to prepare your budget for a hotter inflationary environment.

Start by creating a personal “CPI index” to figure out exactly how much you spend on essentials today. Compare today’s prices with your spending from the last two or three months, then calculate what would happen if your monthly expenses rose by another $100 or $200. What would make the most sense to trim to make some extra breathing room?