Inflation rose one-tenth of a percentage point to 3% for the year ending in September in the consumer price index, the Bureau of Labor Statistics reported Friday.
Forecasters had expected that inflation would rise to 3.1%, so the numbers are slightly better than expected. The latest data come during the government shutdown, which has delayed key employment and inflation data. The CPI’s release is an exception to the delay.
The higher inflation reading suggests that some price pressures from tariffs are filtering through. The Trump administration has repeatedly defended the president’s historically aggressive tariff agenda.
CONSUMER SENTIMENT FELL AS GOVERNMENT SHUT DOWN
Core inflation, a measure that strips out volatile food and energy prices, was at a 3% annual rate.
In the month of September alone, prices rose 0.3%.
The latest CPI report is the last such inflation report that the Federal Reserve will receive before it meets next week to decide whether to cut interest rates again. Trump has been pushing the Fed to cut rates for months, and the Fed recently pivoted to cutting at its last meeting.
One missed report this month was the producer price index, another gauge of inflation. The shutdown has sent ripples through the government and caused many things to be delayed or put off until Congress votes to reopen the government.
The Fed’s goal is 2% annual inflation, but because of recent indications that the labor market is slowing, there is speculation that the Fed will need to loosen monetary policy to cushion the blow to the economy.
But the most pressing missing data are likely the monthly employment numbers.
The labor market has begun to soften meaningfully, something that has raised alarms about the possibility of an economic downturn and has caused the Fed to begin cutting interest rates as a means of support.
The economy added just 22,000 jobs in August, and the unemployment rate rose to 4.3%.
WHITE HOUSE PRESSURES DEMOCRATS OVER SHUTDOWN DELAYS TO KEY ECONOMIC DATA
The July jobs report also revealed that some 258,000 fewer jobs were added in May and June than previously reported. Additionally, the government announced that labor market growth for the 12 months ending in March was 911,000 jobs fewer than previously reported.
Without data on the labor market, the Fed is flying a bit blind in adjusting its monetary policy, although it does have some alternative gauges to inform its thinking.
