US Consumer Prices Increase Marginally Below September Expectations
In September, U.S. consumer prices saw a smaller-than-expected increase. The Consumer Price Index (CPI) rose by 0.3%, having climbed by 0.4% in August. This data, released by the Labor Department’s Bureau of Labor Statistics, puts the Federal Reserve in a position to consider lowering interest rates soon.
Consumer Price Index Analysis
Year-over-year, the CPI grew by 3.0%, compared to a 2.9% rise in August. Economists had predicted a 0.4% increase for September and a 3.1% year-over-year rise.
Core CPI Data
When excluding food and energy prices, the core CPI showed a 0.2% gain in September following a 0.3% rise the previous month. Year-on-year, the core CPI is up 3.0%, down slightly from 3.1% in August.
Impact of Government Shutdown
Notably, this CPI report was issued amidst an economic data blackout caused by the government shutdown. It played a crucial role in assisting the Social Security Administration with its cost-of-living adjustments for 2026. This report was initially scheduled for release on October 15.
Economic Conditions and Inflation
Economists contend that businesses have gradually adjusted to import tariffs after President Trump’s duties were enacted. It is estimated that consumers have absorbed approximately 20% of these tariffs. However, companies have drawn down their inventories significantly, leading to increased costs for retailers such as Walmart.
- September CPI increase: 0.3%
- August CPI increase: 0.4%
- Year-over-year CPI increase: 3.0%
- Core CPI increase: 3.0%
- Estimated consumer absorption of tariffs: 20%
Federal Reserve Expectations
The Federal Reserve is anticipated to cut the benchmark overnight interest rate by 25 basis points in its next meeting, bringing the rate to the range of 3.75% to 4.00%. This move aligns with its goal to maintain a 2% inflation target, tracked through the Personal Consumption Expenditures price index.
Concerns Over Future CPI Reports
Despite the release of the September CPI, concerns are rising over the integrity of upcoming reports due to the ongoing government shutdown. Much of the data collection for October has been hampered, leading many economists to express uncertainty about the accuracy of future CPI reports. Historical context reveals that during the 2013 shutdown, most data for October could still be gathered, but current challenges may impede reporting.
This latest CPI report highlights significant economic shifts and sets the stage for potential policy adjustments by the Federal Reserve, reflecting ongoing inflationary pressures in the U.S. economy.
