Consumer Price Index (CPI): Up 0.3% month-over-month in September
Year-over-Year CPI: 3.0%, slightly below forecasts
Core CPI (ex-food & energy): Gains 0.2% monthly, 3.0% YoY
Impact: Tariffs raise consumer goods costs; rents and travel prices ease inflation pressure
U.S. Inflation Cools Slightly in September
Consumer prices in the U.S. rose 0.3% in September, after a 0.4% gain in August, according to the Bureau of Labor Statistics (BLS). On a year-over-year basis, CPI increased 3.0%, slightly below economists’ expectations of 3.1%.
The moderation reflects slower rent increases and a decline in airfare, hotel, and used car prices, partially offsetting rising gasoline costs, which surged 4.1% for the month.
“This inflation print is a sigh of relief for the Fed,” said Olu Sonola, Head of U.S. Economic Research at Fitch Ratings.
Core Inflation Trends
Excluding food and energy, core CPI edged up 0.2% in September, driven by a slowdown in housing costs.
- Owners’ Equivalent Rent: Rose 0.1%, the smallest monthly increase since January 2021
- Travel Costs: Airline tickets +2.7%, hotel rooms +1.3%
- Services Dependent on Migrant Labor: Home care +7.0% monthly, gardening +13.9% YoY
Tariff-related costs continue to influence prices for apparel (+0.7%), appliances (+0.8%), and furniture (+0.9%).
Food Price Movements
Food prices rose 0.2% in September, after a 0.5% increase in August:
- Grocery Store Food Prices: +0.3%
- Beef: +1.2% monthly, +14.7% YoY
- Coffee: -0.1% monthly, +18.9% YoY
Higher beef and coffee prices reflect prior drought impacts, feed costs, and tariffs on imports. The Trump administration recently expanded low-tariff Argentine beef imports to ease domestic pressure.
Tariffs and Import Costs
While U.S. businesses have absorbed a portion of tariff costs, price pressures are gradually passing to consumers:
- Retailers like Walmart report rising costs as they restock post-tariff inventories
- Economists estimate about 20% of tariffs have been passed through so far
- Forecasted cumulative tariff shock: ~0.8 percentage points by early 2026
Government Shutdown Threatens October CPI
The ongoing U.S. government shutdown—the second-longest in history—has disrupted data collection for October CPI:
- More than two-thirds of the month’s data is missing
- White House warns the CPI release may be delayed for the first time in history
- Analysts caution this could complicate Federal Reserve policy decisions
“The BLS is dramatically understaffed compared to 2013, so producing a full October CPI report seems almost impossible,” said former BLS Commissioner Erica Groshen.
Implications for Federal Reserve Policy
The September CPI report keeps the Fed on track to reduce interest rates by 25 basis points next week, targeting a 3.75%-4.00% range.
Economists expect that slowing rent and travel inflation, combined with a weakening labor market, will support a near-term rate cut. However, uncertainty from the government shutdown could affect the Fed’s ability to gauge economic trends accurately.
September’s CPI data shows moderate inflation, led by surging gasoline and selective service costs, while rents and core services cool. Yet, U.S. consumers still face tariff-driven price pressures. The delayed October report due to the government shutdown adds uncertainty, making it a critical moment for Federal Reserve policy and market expectations.
About The Author
