 "US inflation rose less than expected in September, boosting chances of Fed rate cut next week")
US consumer prices rose slightly less than expected in September, strengthening expectations that the Federal Reserve will cut interest rates again next week.
According to the Labor Department’s Bureau of Labor Statistics, the Consumer Price Index (CPI) increased 0.3 per cent in September, down from 0.4 per cent in August. Over the past 12 months, inflation rose 3.0 per cent, slightly below economists’ forecast of 3.1 per cent.
Excluding food and energy, core CPI rose 0.2 per cent month-on-month and 3.0 per cent annually, suggesting inflation remains above the Fed’s 2 per cent target despite cooling slightly.
The report — delayed nine days due to the government shutdown — is one of the few key economic releases published this month. A small group of Bureau of Labor Statistics staff were recalled specifically to produce the CPI data, as it determines next year’s Social Security cost-of-living adjustment (COLA).
Following the data, the Social Security Administration announced that payments to retirees will rise by 2.8 per cent next year, or roughly 56 dollars more per month starting in January.
Wells Fargo economist Nicole Cervi said the softer inflation reading still reflects persistent price pressures: “Even if the monthly inflation data came in softer than expected, the underlying trend is that inflation remains persistent.”
The Fed is widely expected to cut rates by 0.25 percentage points at its meeting next week — marking its second consecutive rate cut — as it aims to support growth amid trade pressures and data disruptions from the ongoing shutdown.
Impact Shorts
More ShortsMeanwhile, economists warn that the next inflation report could face data gaps, as much of October’s collection was suspended. Despite this, the September figures offer cautious optimism that inflation is gradually easing.
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