US inflation comes in lower than expected, and the core CPI has also risen less than expected, setting the stage for a US Fed rate cut next week. The US Bureau of Labor Statistics released September 2025 CPI data, despite the government shutdown, ahead of the upcoming FOMC meeting, where the Fed is expected to cut interest rates by 25 basis points. The September 2025 CPI data was earlier scheduled to be released on October 15.
The US Bureau of Labor Statistics released September 2025 CPI data, despite the government shutdown, ahead of the upcoming FOMC meeting, where the Fed is expected to cut interest rates by 25 basis points. The September 2025 CPI data was earlier scheduled to be released on October 15.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in September, after rising 0.4 percent in August, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all-items index increased 3.0 percent before seasonal adjustment. The September CPI data collection was completed before the lapse in appropriations.
The index for all items less food and energy rose 0.2 percent in September, after rising 0.3 percent in each of the 2 preceding months.
Indexes that increased over the month include shelter, airline fares, recreation, household furnishings and operations, and apparel. The indexes for motor vehicle insurance, used cars and trucks, and communication were among the few major indexes that decreased in September.
The all items index rose 3.0 percent for the 12 months ending September, after rising 2.9 percent over the 12 months ending August. The all items less food and energy index also rose 3.0 percent over the last 12 months. The energy index increased 2.8 percent for the 12 months ending September. The food index increased 3.1 percent over the last year.
The annual inflation rate in the US rose to 3% in September 2025, the highest since January, from 2.9% in August and below forecasts of 3.1%.
The energy index increased 2.8% and the food index increased 3.1%. Meanwhile, core inflation actually slowed to 3% from 3.1%, with markets expecting it to stay at 3.1%.
Compared to the previous month, the CPI increased 0.3%, below 0.4% in August and forecasts of 0.4%. The index for gasoline rose 4.1% and was the largest factor in the all items monthly increase.
Core consumer prices in the US, which exclude food and energy, rose by 0.2% from the previous month in September of 2025, slowing from the 0.3% in the August and July, and slightly under market expectations of a 0.3% increase.
The next FOMC meeting is scheduled for October 28-29, with a 25bps rate cut expected. The CME FedWatch Tool predicts a 50-bps rate drop this year.
US stock futures extended gains on Friday after inflation data came in cooler than expected, reinforcing hopes of a Federal Reserve rate cut next week. Futures for the S&P 500 rose 0.67%, Nasdaq 100 gained 0.97%, and Dow Jones futures climbed about 250 points.