All eyes are on today’s U.S. Consumer Price Index (CPI) data, one of the most important economic releases of the month. Economists expect prices to have risen by 0.4% in September, matching August’s pace. On an annual basis, inflation is projected to increase by 3.1%, while core inflation (excluding food and energy) is forecast to rise 0.3% month-over-month and 3.1% year-over-year.
The report is being released despite the ongoing U.S. government shutdown, as the data are crucial for calculating the Social Security cost-of-living adjustment (COLA) for millions of retirees and benefit recipients. The release was originally scheduled for October 15.
Analysts note that tariff-related pressures on imported goods like clothing and electronics continue to drive consumer prices higher. While energy costs have edged up, food inflation appears to have stabilized somewhat, though items like beef and coffee remain elevated due to earlier droughts and supply disruptions.
According to Sarah House of Wells Fargo, goods inflation is likely to remain sticky due to continued tariff pass-through, while easing shelter costs could help moderate services inflation.
Despite persistently elevated inflation, the Federal Reserve is not expected to shift its broader stance ahead of its October 30 policy meeting, though a softer CPI print could strengthen the case for a rate cut later this year if labor market conditions weaken further.
Markets are bracing for a potential reaction: A stronger-than-expected CPI could boost the U.S. dollar and weigh on equities, while a softer reading would likely reinforce expectations for easing monetary policy and a dovish Fed tone.
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