What to Expect from September US CPI Report

Published on: 2025-10-24

The US Bureau of Labor Statistics releases September Consumer Price Index data today, Friday, October 24, at 8:30 AM Eastern Time (9:30 PM GMT+8).

Economists forecast headline inflation at 3.1% year-over-year, up from 2.9% in August, marking the highest reading since May 2024 when inflation reached 3.3%.

Core inflation, which strips out volatile food and energy prices, is expected to hold steady at 3.1%. The report arrives during a government shutdown, making it the only major economic data release this week and heightening its market impact.

Traders will watch closely as the Federal Reserve meets October 30-31 to decide on interest rate cuts despite inflation remaining well above the 2% target.

US September CPI Forecast: 3.1% vs 2.9% Prior

The Bureau of Labor Statistics delayed this release from its original October 15 date due to the government shutdown. Staff were recalled from furlough specifically for this report because Social Security cost-of-living adjustments depend on the data. [1]

Monthly figures show equally concerning trends. Headline CPI is forecast to rise 0.4% from August to September, whilst core CPI is expected to increase 0.3%. These monthly gains would mark consecutive acceleration in price pressures, edging further from the Federal Reserve's 2% target.

Cleveland Federal Reserve's inflation nowcast, updated October 23, projects the September monthly CPI at 0.38% with an annual rate of 2.99%, whilst core CPI is forecast at 0.26% monthly and 2.95% annually. For October, their model shows some moderation with projections of 0.19% monthly and 2.95% annually for headline CPI.

What's Driving US Inflation Higher in September

President Trump's tariff policies represent the primary force pushing prices higher. Goldman Sachs research shows companies have passed roughly 55% of import taxes onto American consumers. These costs filter through supply chains gradually, meaning September's data captures only partial tariff effects.

CPI Component	Expected Impact	Key Driver	Analysis
Energy/Gasoline	Notable increase	Rising crude oil prices	Contributes to headline acceleration
Food	Continued pressure	Supply chain costs, weather	Persistent upward trend
Apparel	Larger price increases	Direct tariff pass-through	Most affected goods category
Home Furnishings	Accelerating from prior months	Import duties on Chinese goods	Tariff impact visible
Shelter/Housing	Elevated but moderating	Lagged rent increases	Largest CPI component at 33%

TD Securities analysts note that goods inflation is accelerating due to tariff pass-through, whilst service-sector inflation shows signs of cooling, particularly in housing. However, shelter costs remain stubbornly elevated despite some moderation from previous peaks.

Kristy Akullian, head of investment strategy at BlackRock, confirms that "in specific categories like apparel, furniture, and sporting goods, we've certainly seen a little bit of an uptick on the goods side of inflation, which is probably some of that tariff pass-through".

University of Michigan consumer surveys show inflation expectations edging downward despite rising actual prices. One-year expectations dropped to 4.6% in October from 4.9% in September, suggesting consumers view current pressures as temporary rather than permanent.

Fed Rate Cut Expected Despite Rising Inflation

The Federal Reserve Open Market Committee meets October 30-31, just days after this CPI release. Bond futures markets price in near-unanimous expectations for a 25 basis point rate cut at that meeting, bringing the Fed funds rate from the current 4.00%-4.25% down to 3.75%-4.00%. A second cut in December is widely anticipated, targeting 3.50%-3.75% by year-end.

This creates an apparent contradiction - inflation accelerating whilst the Fed continues cutting rates. However, officials view labour market cooling as justification for easing policy despite elevated price pressures. Chair Jerome Powell has indicated the committee will move cautiously, adjusting policy based on incoming data.

Jeffrey Roach, chief economist at LPL Financial, characterises the situation as "inflation is certainly temporarily running hot, but the operative word is temporary". He suggests the tariffs represent a one-time bump for consumer prices rather than permanent reacceleration. The Federal Reserve has indicated it expects inflation will stay above its 2% target for roughly a year, though some economists think deceleration may occur sooner.

Citigroup economists expressed concern about data quality during the shutdown. Without real-time collection capabilities, the Bureau of Labor Statistics faced challenges gathering complete information. These uncertainties add complexity to Fed deliberations, though government statisticians have assured the public that data integrity remains intact.

How Markets React to CPI Surprises: Three Scenarios

Today's 8:30 AM ET release will trigger immediate reactions across asset classes. The data carries extra weight as the sole major economic indicator published during the government shutdown. [2]

CPI Reading	Dollar Reaction	Stock Market	Bond Yields	Fed December Cut Probability
Above 3.3%	Strengthens sharply	Declines notably	Rise significantly	Falls below 50%
3.1% (Consensus)	Modest strength	Mixed reaction	Modest increase	Holds at 85%+
Below 2.9%	Weakens notably	Rallies on soft landing hopes	Decline	Rises above 95%

The dollar has traded cautiously ahead of the report, with currency markets awaiting a clear direction. A significantly higher-than-expected reading would likely boost the dollar across major pairs as rate cut expectations diminish. Conversely, a soft reading might extend recent equity rallies and weaken the dollar.

Stock indices face downside risks from upside inflation surprises. Equity markets have rallied in recent weeks on expectations that the Fed will continue easing policy. Data showing accelerating inflation could undermine that narrative and trigger profit-taking.

Treasury yields will respond directly to the inflation print and subsequent Fed expectations. Yields have climbed modestly in recent days as investors position for potentially higher CPI numbers. Two-year yields, more sensitive to near-term Fed policy, could see sharper moves depending on how the data affects December rate cut probabilities.

Key Dates Ahead

The following schedule outlines upcoming events related to US monetary policy and inflation data:

October 24, 8:30 AM ET: September CPI release (today)
October 30-31: Federal Reserve FOMC meeting; 25 basis point cut expected
November 13, 8:30 AM ET: October CPI release
December 17-18: Fed meeting; potential second rate cut anticipated

Today's report serves as a critical checkpoint in the inflation story. Whether prices are genuinely reaccelerating or experiencing temporary volatility from tariffs will become clearer in the coming months. The September reading will either reinforce expectations that inflation remains on a downward path toward the Fed's 2% target or suggest that progress has stalled.

LPL Financial's Roach expects the tariff-related price pressures to prove transitory, whilst BlackRock's Akullian notes specific categories showing clear tariff pass-through effects. The debate centres on whether September's expected 3.1% reading represents a temporary spike or the beginning of a more concerning trend.

For traders and investors, heightened volatility is expected when the data prints at 8:30 AM Eastern Time, with potential for significant moves across currencies, equities, and fixed income markets. The absence of other economic data during the shutdown means this single report will carry outsized influence on market sentiment and Fed expectations. [3]

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment, or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.