US consumer prices rise slightly less than expected in September

[WASHINGTON] US consumer prices increased slightly less than expected in September, keeping the Federal Reserve on track to cut interest rates again next week. The Consumer Price Index (CPI) rose 0.3 per cent last month after climbing 0.4 per cent in August, the Labor Department’s Bureau of Labor Statistics said on Friday (Oct 24). In the 12 months through September, the CPI increased 3 per cent after advancing 2.9 per cent in August.

Economists polled by Reuters had forecast the CPI increasing 0.4 per cent and rising 3.1 per cent year on year. Excluding the volatile food and energy components, the CPI gained 0.2 per cent after rising 0.3 per cent in August. The so-called core CPI increased 3 per cent year on year after rising 3.1 per cent in August.

The CPI report was published despite an economic data blackout because of the government shutdown in order to help the Social Security Administration calculate its 2026 cost-of-living adjustment for millions of retirees and other benefits recipients. It was initially due on Oct 15.

The import tariff pass-through has been gradual as businesses worked through inventory accumulated prior to President Donald Trump’s broad duties and also absorbed some of the taxes.

Inventories have been drawn down

Economists say companies have done so at the expense of hiring and estimate consumers so far have absorbed about 20 per cent of the duties. But inventories were drawn down in the second quarter and retailers like Walmart said they were seeing costs rising as they replenished stock at post-tariff price levels, something they expected to continue for the rest of the year.

Economists expect prices to steadily rise into 2026. The US central bank tracks the Personal Consumption Expenditures price indexes for its 2 per cent inflation target. The Fed is expected to lower its benchmark overnight interest rate by another 25 basis points next Wednesday to the 3.75-4 per cent range.

While investors and policymakers will welcome the reprieve from the official economic data blackout, concerns are rising over the quality of October’s CPI report, with potential spillovers to November, given the suspension of data collection.

Consumer prices are collected throughout the month, the bulk physically, and the shutdown means more than half of the October data is already missing, leading economists to question whether that report will be published when the shutdown ends.

During the 2013 government shutdown, about 75 per cent of the CPI data was collected that October.

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The disruptions from the shutdown come as the BLS is already dealing with resource constraints because of budget and staffing cuts that have led to the suspension of data collection for portions of the CPI basket in some areas across the country. REUTERS