| Consensus | Consensus Range | Actual | Previous | |
| CPI - M/M | 0.6% | 0.5% to 0.7% | 0.6% | 0.4% |
| CPI - Y/Y | 3.7% | 3.3% to 3.7% | 3.7% | 3.4% |
| Ex-Food & Energy- M/M | 0.2% | 0.2% to 0.3% | 0.3% | 0.3% |
| Ex-Food & Energy- Y/Y | 2.5% | 2.4% to 2.5% | 2.6% | 2.4% |
Highlights
The U.S. inflation story is no longer just about energy prices driving the headline CPI higher. The September CPI report again shows the impact of Middle East conflict(s) on fuel prices, but core consumer prices (excluding food and energy) remain high, with elevated shelter costs and apparel prices, in particular.
This report increases the odds of another rate increase, although it remains an open question if the Fed will wait until after the November midterm elections.
On the political front (amid the ongoing backlash to AI data centers), electricity costs remain elevated – now higher by 4.4 percent compared to a year ago.
The Consumer Price Index in September rose 0.6 percent, speeding up from the 0.4 percent increase in August, and after +0.1 percent in July. The September CPI reading matched expectations for a 0.6 percent jump in the Econoday survey of forecasters.
Over the last 12 months, consumer prices are up 3.7 percent, compared to a 3.4 percent rise in August. Expectations in the Econoday survey were for a 3.7 percent spike.
Core CPI, excluding food and energy prices, rose 0.3 percent in September, following a 0.3 percent increase in August. Consumer prices less food and energy rose 2.6 percent from September 2025, following a 2.4 percent year-over-year rise in July and higher than the +2.5 percent expected in the Econoday survey.
Energy costs accelerated by 5.2 percent, following a 2.1 percent increase in August – boosted by a 9.1 percent spike in gasoline prices.
Energy prices are up 20.4 percent year-over-year, following a 16.3 percent increase for the 12 months ending August. Gasoline prices soared 34.2 percent last month compared to a year ago.
After a 0.3 percent rise in August, shelter costs sped up by 0.4 percent in September (and are up 3.2 percent year-over-year). Apparel prices increased 0.3 percent and surged by 3.4 percent from a year ago.
Food prices were unchanged, following a 0.1 percent uptick in August. Grocery prices fell 0.1 percent on a monthly basis in September but are up 1.8 percent compared to a year ago, and restaurant prices rose 0.2 percent and surged 3.5 percent compared to September 2025.
Food prices overall increased 2.5 percent compared to September 2025, following a 2.7 percent rise in August.
Market Consensus Before Announcement
Energy costs continue to play havoc: a 0.6 percent rise is expected on the month and 3.7 percent on year. Core is seen better behaved at 0.2 percent and 2.5 percent.
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.
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.
