US inflation rose at a 3% annual rate in September amid Trump tariffs, CPI report reveals

The latest US government inflation report revealed that the prices of products in the country continued to rise in September at an annual rate of 3 per cent. The September 2025 consumer price index (CPI), which was published two weeks later than usual, reflected the growing inflation in the country.

The delay was attributed to the government shutdown, which halted all Bureau of Labour Statistics operations. Interestingly, staff furloughed during the government shutdown were recalled to prepare the inflation report, which the Social Security Administration relies on to calculate an annual cost-of-living adjustment for benefits.

After the announcement, the government stated that the US retirees will receive a 2.8 per cent increase in social security payments in 2026. The consumer prices increased 0.3 per cent in September 2025, which was largely driven by a 4.1 per cent increase in gasoline prices. The forecast for the report estimated a continued increase in inflation, with economists predicting a 0.4 per cent month-over-month increase and a 3.1 per cent annual increase.

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Why it matters

It is pertinent to note that consumer prices were up 2.9 per cent in August 2025 from August 2024, after rising 2.7 per cent over the same period in June and July. The US Federal Reserve is scheduled to meet next week and is expected to cut interest rates.

The Fed cut rates in September, which was the first since December last year, amid signs that hiring is weakening. The United States added just 22,000 jobs in August. The latest inflation report also comes at a time when multiple polls suggested that the majority of Americans admit their monthly costs have increased between $100 and $749 compared with last year.

While returning to the White House, US President Donald Trump pledged to “end inflation”. “Starting the day I take the oath of office, I will rapidly drive prices down and we will make America affordable again. We’re going to make it affordable again," he said in a statement.

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Last month, Trump told the United Nations General Assembly that “inflation has been defeated”. However, the country’s inflation remains above pre-pandemic levels and the Federal Reserve’s target of 2 per cent, with Trump’s tariffs driving up the cost of many imported items such as furniture, appliances and toys.

“At least until the full effect of tariffs is passed through to consumers, the inflation rate is more likely to be rising than falling,” wrote Dean Baker, senior economist with the Centre for Economic Policy and Research, in a post on what to expect in the September CPI report.

“The problem is compounded insofar as new tariffs are imposed, and deportations hit more sectors. Barring a major economic downturn, it is difficult to envision a scenario where inflation hits the Fed’s target any time soon," he added.