Could Election-Year Uncertainty Affect Gas, Grocery or Mortgage Costs? What Actually Drives Prices?
With the midterm elections approaching, affordability is already shaping how voters are thinking about November.
An August Reuters/Ipsos poll found that nearly half (47%) of registered voters said the cost of living would be the single most important factor in deciding their vote — and they're not imagining the squeeze. According to the latest data from the Bureau of Labor Statistics, grocery prices are up 2.2% year-over-year, gas jumped 27.4% and average 30-year mortgage rates hit 7.28% as of Oct. 7 (per Freddie Mac).
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So, how much of those higher costs are tied to election-year uncertainty? Sure, policy expectations matter, but the real drivers are way more specific and way less political than you'd think.
Election Uncertainty Has Limits
Election-year uncertainty usually isn't what drives the prices families pay for food, gas or housing, said Drew Rathgeber, president of ProFutures Trader, a commodities trading firm.
What matters more is policy expectations, specifically tariffs, energy policy and government spending. These can move the dollar and bond yields, which ripple through markets in real ways.
Gas prices are a good example. Presidents often get the credit or blame, but Rathgeber said prices at the pump are mostly driven by global oil and refinery conditions.
What Really Drives Gas Prices
Prices at the pump are mainly driven by crude oil costs, supply and demand, refinery conditions, transportation and taxes.
Patrick Vishy, a behavioral finance educator, pointed out that scarcity and availability matter too. Refining capacity and how far oil has to travel all affect what you pay.
Markets move on expectations, not just reality. If traders expect oil to become scarcer, that expectation can push futures prices higher before supply actually changes.
"Even the speculation of either one will show up in the futures market, which will then reflect on price," Vishy said.
Why Grocery Increases Linger
Food prices operate on different rules entirely. Rathgeber said the cost of the raw commodity, such as wheat used in bread or corn used for livestock feed, may represent only a small portion of what consumers ultimately pay. Labor, trucking, packaging and energy expenses pile on top.
“That’s why grain futures can fall while grocery bills stay high, and why grocery prices move slowly,” added Rathgeber.
Some foods have additional supply constraints. Beef is a good example because cattle supplies can't be quickly replenished when they tighten.
What Moves Mortgage Rates
Home prices are climbing too — the median existing-home price was $429,100 in August, up 1.6% from a year earlier, according to the National Association of Realtors. So, buyers face a double squeeze: higher home prices plus expensive borrowing.
Mortgage rates aren't directly tied to the Federal Reserve's benchmark rate. Instead, they track the 10-year Treasury yield and investors' inflation expectations.
The disconnect matters. "Mortgage rates can rise even while the Fed is cutting," Rathgeber said.
The Real Indicators Worth Watching
If you want to cut through the election-year noise, Rathgeber recommended tracking the actual drivers:
Gas: Watch crude oil and gasoline futures
Mortgages: Tracking the 10-year Treasury yield can provide clues about where borrowing costs may be headed
Groceries: Keep tabs on cattle and grain futures, plus the Producer Price Index
The Consumer Price Index, published monthly, shows the broader picture of what households are actually paying.
These indicators won't predict next month's bills with precision. But they'll give you a far clearer read on what's really moving your wallet.
Editor’s note on political coverage: MoneyLion is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on MoneyLion.com.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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