September CPI Softens; Shutdown Threatens Future Data

US consumer prices rose 0.3% in September and 3.0% year-over-year, with core CPI running about 3.0% annually (core monthly up roughly 0.2%). The softer-than-expected reading has cemented market and Fed expectations for an interest-rate cut at next week’s FOMC meeting and keeps the door open for further easing later in the year. The Bureau of Labor Statistics completed September data collection before the federal government shutdown, so the September CPI release was not delayed, but the shutdown is disrupting October data collection and threatens a hiatus in monthly CPI and other economic reports. The September reading set the Social Security 2026 cost-of-living adjustment at 2.8%. Economists say the report gives the Fed room to enact an “insurance” cut amid signs of a weakening labor market, even as political actors have highlighted the data for their own narratives.