Inflation Report: CPI to Keep Heading in the Wrong Direction

Follow live coverage and analysis of the September economic data.

Last Updated:  Oct. 23, 2025 at 7:10 PM ET

Awaiting the Latest Release

The Bureau of Labor Statistics is slated to release the September reading of the consumer price index on Friday.

Here’s what economists surveyed by FactSet are expecting:

Overall YoY: +3.1%, up from +2.9% in August

Overall MoM: +0.4%, same as in August

Core YoY: +3.1%, the same rate as in August

Core MoM: +0.3%, same as in August

Key Events

Why Friday’s CPI Data Likely Won’t Stop the Fed’s Rate Cuts

Why Friday’s CPI Data Likely Won’t Stop the Fed’s Rate Cuts

By Megan Leonhardt

The pace of inflation likely picked up last month, but not enough to prevent the Federal Reserve from cutting interest rates next week.

The Bureau of Labor Statistics is scheduled to publish the consumer price index for September on Friday at 8:30 a.m. Eastern. This is a somewhat special release amid the ongoing government shutdown to ensure that the Social Security Administration has the data it needs to calculate inflation-adjusted benefit payments.

Latest Updates

Fed Rate Cut in October Is as Good as Done. December Is Where It Gets Interesting.

Read the full article

The pace of inflation likely picked up last month, but not enough to prevent the Federal Reserve from cutting interest rates next week.

The Bureau of Labor Statistics is scheduled to publish the consumer price index for September on Friday at 8:30 a.m. Eastern. This is a somewhat special release amid the ongoing government shutdown to ensure that the Social Security Administration has the data it needs to calculate inflation-adjusted benefit payments.

The Social Security Administration is required to calculate the annual cost of living adjustment benefits and other program adjustments using the third-quarter CPI data and to publish the increases before Nov. 1. Because of this, the necessary furloughed BLS staff were called back to produce the September CPI. That reprieve, however, only applies to the September data.

Economists surveyed by FactSet expect the report to show that inflation remained on a fairly stable trajectory. They forecast the CPI rose 0.4% month over month in September, translating to annual growth of 3.1%.

If that proves to be the case, it will be the first time since the start of the year that headline CPI inflation was above 3%. In August, inflation also climbed 0.4% on the month and registered 2.9% year over year. The Fed maintains a 2% inflation target.

Core CPI inflation—which excludes the more volatile food and energy costs—is expected to show slightly less pickup. Economists project core CPI climbed 0.3% month over month in September, the same pace as August. Annual growth is expected to be 3.1%, the same rate as August as well.

Stephen Juneau, economist at Bank of America Securities, writes that while his expectations for the latest CPI print are in line with consensus estimates, core goods inflation is set to moderate slightly. He expects to see a 0.1% monthly increase in core goods for September due to a pullback in used car prices. That would be a deceleration from August’s 0.3% monthly pace.

Shelter prices might also provide some relief in Friday’s report. In August, shelter inflation measured 0.4% month over month, but Nomura’s David Seif predicts that rent-related components likely moderated last month.

“The firming of regular rent and [owners’ equivalent of rent] inflation in August was unsustainable,” he writes. Rent inflation in small cities tends to be more volatile compared with large metros, Seif notes, chalking up the August surge to “idiosyncratic increases in small cities of the South.”

That said, Seif expects to see a slightly stronger-than-consensus print of 0.4% in core CPI inflation for September. He says supercore service components—which exclude food, energy, and housing costs—appear to have picked up slightly last month and that tariffs likely boosted core goods prices.

Yet even with the continued impacts of tariffs working their way through the supply chain, inflation is still largely expected to remain lower than the projections for 3.5% year-over-year growth that economists feared would come to pass earlier this year.

“The inflation passthrough has so far been more muted than anticipated, likely due to a combination of margin compression, inventory frontloading, and trade diversion,” writes Seema Shah, chief global strategist at Principal Asset Management.

With the current modest expectations for inflation pickup this year, the Fed will likely focus on the weaker labor conditions that have taken hold when it conducts its final two meetings of the year. The stalled hiring momentum all but assures that the Federal Open Market Committee will lower the federal funds rate by a quarter percentage point cut at next week’s meeting on Oct. 28-29.

But the ongoing government shutdown could complicate the picture ahead of the Fed’s December meeting. While September’s inflation data are expected to be produced without too many issues, economists are concerned that the October releases might be less reliable because the statistical agency ceased to collect, process, or disseminate data during the shutdown.

That means there could be issues with accuracy. When the 16-day government shutdown in 2013 affected the CPI data collection, the BLS reported that the sample of prices used to calculate the index was smaller, about 75% of the amount usually used.

If Fed officials are left with an incomplete view of inflation, that could sway some to opt to leave rates where they are in December, rather than push ahead with more cuts.

View this Barron’s article CLICK HERE