U.S. Inflation Update for September
In September, U.S. inflation edged up to 3%, which, while lower than anticipated, might set the stage for the Federal Reserve to lower interest rates in their upcoming meeting.
The Bureau of Labor Statistics initially planned to release this data on October 15 but faced delays due to the federal government shutdown. Over the past year, the consumer price index (CPI) rose by 3%, marking the highest increase since January, and just slightly higher than the 2.9% rise from the previous month. Economists surveyed by Bloomberg had predicted a 3.1% increase, and there was a 0.3% monthly rise as well.
Interestingly, core inflation, which excludes more volatile categories like food and energy, also hit 3%, though it was down from 3.1% in the preceding month. Economists had forecasted that it would stay steady at 3.1%.
With economic data releases on hold due to the ongoing government shutdown, which is now in its 23rd day—a record timing—there’s concern about the accuracy of consumer inflation figures.
Schuyler Winand, chief investment officer at Regan Capital, mentioned that softer inflation numbers reinforce expectations for continuous rate cuts by the Fed in the near term. “If there’s a government reopening, combined with rising unemployment rates nearing 5%, we might see a more significant rate cut of 50 basis points in December, or possibly several cuts in 2026,” he added.
The atmosphere on Wall Street is quite tense; investors are eager for any inkling about the state of the economy. The Dow Jones Industrial Average noted a modest uptick, gaining 66 points or about 0.1% premarket.
Nevertheless, with the federal offices mostly shut, the reliability of inflation reports remains uncertain.
Looking ahead, the Federal Reserve is anticipated to announce a rate cut during next Wednesday’s policy meeting, following their initial quarter-point cut last month—the first since December 2024. But there’s a bit of a split among Fed officials on the pace of easing: while Stephen Milan urges a half-point cut, Christopher Waller and others lean toward a quarter-point reduction.
Moreover, economists are closely monitoring how President Trump’s tariffs might be starting to influence prices overall.
