US inflation figures for September came in softer than expected after a slowdown due to the federal government shutdown | Photo credit: Reuters
A delayed snapshot of inflation in September was softer than expected, potentially providing a path for the Federal Reserve to continue cutting rates after next week’s meeting.
The core consumer price index, which excludes often volatile food and energy categories, rose 0.2% from August, according to data released Friday from the Bureau of Labor Statistics. That was the slowest pace in three months and was limited by the smallest increase in a key measure of housing costs since early 2021.
In the absence of other official reports during the government shutdown, the long-awaited outcome is a welcome surprise, especially for several policymakers wary of further rate cuts. While the central bank was widely expected to cut borrowing costs at next week’s meeting, investors are betting the report will convince officials they can do so again in December – especially if they don’t get a new CPI report next month.
The September CPI report was initially scheduled to be released on October 15, but was postponed due to the ongoing federal government shutdown. Although most BLS operations have been halted since the Oct. 1 shutdown, the agency recalled staff to prepare this release so the Social Security Administration could calculate the annual cost-of-living adjustment, which will total 2.8% for next year.
Economists were generally not concerned about the quality of the September inflation report because the data collection took place before the government closed. But BLS has not been able to gather new price information since, and a White House-affiliated X-account said Friday: “There will likely be NO inflation release next month for the first time in history.”
“Once funding is restored, BLS will resume normal operations and notify the public of any changes to the press release schedule on the BLS release calendar,” a BLS spokesperson said in an emailed comment.
The S&P 500 traded higher as Treasury yields and the dollar recovered earlier losses.
What Bloomberg Economics says…
“The CPI report – the first major government data since the shutdown began – is tepid enough to seal the deal for a 25 basis point rate cut later this month, and another in December.”
– Anna Wong and Chris G. Collins. If you would like to read the full note, click here
Goods prices, excluding food and energy commodities, rose at a slower pace in September, driven by lower used car prices. Categories more exposed to tariffs, including home furnishings and recreational goods, advanced. Clothing prices rose the fastest in a year.
Services prices excluding energy increased by 0.2%, partly due to a slower increase in airfares. Shelter prices remained subdued after rising the most since the start of the year in the previous month. That included just a 0.1% increase in owners’ equivalent rent – ​​which accounts for around a quarter of the total CPI.
Household expenses were mixed. While inflation in the food sector declined, prices for key products such as breakfast cereals and non-alcoholic drinks increased. Gasoline costs rose while car insurance prices fell.
Separate figures on Friday showed US consumer confidence fell to the lowest level in five months in October as concerns about persistently high prices persisted.
Even though the September collection was not affected by the shutdown, BLS expanded its use of a technique to fill data gaps it could not collect with traditional methods. The share of imputed prices in the September CPI that relied on so-called different-cell imputation rose to 40%, up from 36% a month earlier and the highest in 2019 data.
Five key insights from Bloomberg’s TOPLive blog
While the inflationary impact of the tariffs has been much smaller than many economists feared, several forecasters and policymakers are still wary that the tariffs will continue to put upward pressure on prices – which was evident in some indicators of private sector inflation in September. President Donald Trump’s latest tariffs, targeting household items such as kitchen cabinets and upholstered furniture, went into effect earlier this month, and retailers like RH have warned of coming price increases.
Businesses across the country have largely reported higher input costs in recent weeks due to tariffs, but the impact on consumers has been uneven, the Fed said in its latest Beige Book survey of regional business contacts. Procter & Gamble Co. now expects a more muted impact from tariffs and commodity prices, while O’Reilly Automotive Inc. said they have adjusted retail prices to account for the increase in tariff-related costs.
“Companies have so far protected consumers from much of the cost increase from tariffs by absorbing them into margins, but further pass-through seems highly likely in the coming months,” Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, said in a note.
In a separate report, the Social Security Administration said Social Security benefits will increase an average of $56 to $2,071 per month starting in January. Data from S&P Global released Friday showed U.S. business activity grew at the second-fastest pace of the year this month.
More stories like this are available at bloomberg.com
Published on October 24, 2025
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