| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| CPI - M/M | 0.4% | 0.3% to 0.5% | 0.3% | 0.4% |
| CPI - Y/Y | 3.1% | 3.0% to 3.1% | 3.0% | 2.9% |
| Ex-Food & Energy- M/M | 0.3% | 0.3% to 0.4% | 0.2% | 0.3% |
| Ex-Food & Energy- Y/Y | 3.1% | 3.0% to 3.2% | 3.0% | 3.1% |
Highlights
September's consumer price inflation rose at a slightly slower pace than expected, powered by a jump in gasoline prices. The BLS noted that it collected the data before the federal government shutdown. This report is unlikely to dissuade the Federal Reserve from another rate cut when the FOMC meets October 28-29, but the continued lack of progress towards the central bank's 2 percent annual inflation objective should lower expectations for several more rate cuts in 2025.
The Consumer Price Index in September slowed a bit to +0.3 percent, following a 0.4 percent rise in August, and a 0.2 percent uptick in July. The September CPI reading was below expectations for a 0.4 percent rise in the Econoday survey of forecasters.
Over the last 12 months, consumer prices are up 3.0 percent, faster than the 2.9 percent year-over-year rise in August. Expectations in the Econoday survey were for a 3.1 percent increase.
Core CPI, excluding food and energy prices, is up 0.2 percent, after rising 0.3 percent in August, and +0.3 percent in July. Consumer prices less food and energy jumped 3.0 percent from September 2024, following a 3.1 percent year-over-year rise in August and 3.1 percent expected in the Econoday survey.
After jumping 0.4 percent in August, shelter costs rose 0.2 percent in September (and are up 3.6 percent year-over-year). Food prices are up 0.2 percent, after a 0.5 percent spike in August, with grocery prices up 0.3 percent last month, and restaurant prices seeing just a 0.1 percent uptick.
Energy costs surged 1.5 percent over the month, following a 0.7 percent rebound in August boosted by a 4.1 percent spike in gasoline prices.
Energy prices are up 2.8 percent year-over-year, following a 0.2 percent dip for the 12 months ending August. Food prices increased by 3.1 percent compared to September 2024, following a 3.2 percent rise in August.
The Consumer Price Index in September slowed a bit to +0.3 percent, following a 0.4 percent rise in August, and a 0.2 percent uptick in July. The September CPI reading was below expectations for a 0.4 percent rise in the Econoday survey of forecasters.
Over the last 12 months, consumer prices are up 3.0 percent, faster than the 2.9 percent year-over-year rise in August. Expectations in the Econoday survey were for a 3.1 percent increase.
Core CPI, excluding food and energy prices, is up 0.2 percent, after rising 0.3 percent in August, and +0.3 percent in July. Consumer prices less food and energy jumped 3.0 percent from September 2024, following a 3.1 percent year-over-year rise in August and 3.1 percent expected in the Econoday survey.
After jumping 0.4 percent in August, shelter costs rose 0.2 percent in September (and are up 3.6 percent year-over-year). Food prices are up 0.2 percent, after a 0.5 percent spike in August, with grocery prices up 0.3 percent last month, and restaurant prices seeing just a 0.1 percent uptick.
Energy costs surged 1.5 percent over the month, following a 0.7 percent rebound in August boosted by a 4.1 percent spike in gasoline prices.
Energy prices are up 2.8 percent year-over-year, following a 0.2 percent dip for the 12 months ending August. Food prices increased by 3.1 percent compared to September 2024, following a 3.2 percent rise in August.
Market Consensus Before Announcement
The delayed CPI is expected to show an increase of 0.4 percent for September on the month and a 3.1 percent rise on year. The core is expected up 0.3 percent and up 3.1 percent on year. Tariffs lifted food and goods prices while services is not really slowing down. It’s also problematic that gasoline prices and commodities were generally higher in September. Not a pretty picture for the Fed at the same time employment seems to be suffering.
Definition
The CPI is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation for the consumer. Annual inflation is also closely watched.
The consumer price index is available nationally by expenditure category and by commodity and service group for all urban consumers (CPI-U) and wage earners (CPI-W). All urban consumers are a more inclusive group. The CPI-U is the more widely quoted of the two, although cost-of-living contracts for unions and Social Security benefits are usually tied to the CPI-W, because it has a longer history. Monthly variations between the two are slight.
The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas. The regional and city CPIs are often used in local contracts.
The Bureau of Labor Statistics also produces a chain-weighted index called the Chained CPI. This measures a variable basket of goods and services whereas the regular CPI-U and CPI-W measure a fixed basket of goods and services. The Chained CPI is similar to the personal consumption expenditure price index that is closely monitored by the Federal Reserve Board.
The consumer price index is available nationally by expenditure category and by commodity and service group for all urban consumers (CPI-U) and wage earners (CPI-W). All urban consumers are a more inclusive group. The CPI-U is the more widely quoted of the two, although cost-of-living contracts for unions and Social Security benefits are usually tied to the CPI-W, because it has a longer history. Monthly variations between the two are slight.
The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas. The regional and city CPIs are often used in local contracts.
The Bureau of Labor Statistics also produces a chain-weighted index called the Chained CPI. This measures a variable basket of goods and services whereas the regular CPI-U and CPI-W measure a fixed basket of goods and services. The Chained CPI is similar to the personal consumption expenditure price index that is closely monitored by the Federal Reserve Board.
Description
The consumer price index is the most widely followed monthly indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets- and your investments.
If someone borrows $100 dollars from you today and promises to repay it in one year with interest, how much interest should you charge? The answer depends largely on inflation as you know the $100 will not be able to buy the same amount of goods and services a year from now. The CPI tells us that prices rose 4.2 percent in the U.S. over 2007. To recoup your purchasing power, you would have to charge 4.2 percent interest. You might want to add one or two percentage points to cover default and other risks, but inflation remains the key factor behind the interest rate you charge.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets- and your investments.
If someone borrows $100 dollars from you today and promises to repay it in one year with interest, how much interest should you charge? The answer depends largely on inflation as you know the $100 will not be able to buy the same amount of goods and services a year from now. The CPI tells us that prices rose 4.2 percent in the U.S. over 2007. To recoup your purchasing power, you would have to charge 4.2 percent interest. You might want to add one or two percentage points to cover default and other risks, but inflation remains the key factor behind the interest rate you charge.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
