Inflation Jumped In September—Here’s What To Know

Topline

Inflation jumped again in September, according to delayed data released Friday by the Bureau of Labor Statistics, the last economic report before the Federal Reserve’s policymaking meeting next week.

Federal inflation data was postponed for the first time in years as a government shutdown delayed economic reports.

Key Facts

Consumer prices rose 3% last month from September 2024 and 0.3% between August and September, the Bureau of Labor Statistics reported Friday, just below Wall Street’s estimates of 3.1% and 0.4%, respectively, according to FactSet.

Core consumer prices, a measurement excluding the volatile food and energy markets, rose 3% annually and 0.2% month-to-month, under economist projections of 3.1% and 0.3%, respectively.

Gas prices rose 4.1% in September, the largest monthly increase among all items tracked by the BLS, while energy rose 1.5%.

What To Watch For

The central bank, unaffected by an ongoing government shutdown, will meet Oct. 28 and Oct. 29 to discuss whether to lower interest rates again. The Fed voted 11-1 in September to lower rates by a quarter-point to between 4% and 4.25%, and minutes from the meeting released earlier this month indicated that policymakers were split on how many additional rate cuts were necessary this year. “Almost all” of the Fed’s Federal Open Market Committee expected a 25-basis-point cut to rates in September, a “vast majority” projected two cuts by the end of the year and “around half” projected three, according to the minutes, potentially lowering interest rates to between 3.5% and 3.75% by the FOMC’s last meeting in December.

What Do We Know About Employment Data?

Several job reports have been sidelined in recent weeks by the government shutdown, though some economists have released estimates for the labor market that suggest a further decline. The Carlyle Group estimated 17,000 jobs were added by U.S. employers in September, below the 22,000 nonfarm positions the BLS reported in August, while the private payroll processing firm ADP reported earlier this month that private-sector payrolls decreased by 32,000 in September, the largest decline since March 2023. Analysts previously projected the unemployment rate to settle at 4.3% for September, matching August’s rate, according to FactSet. Wall Street additionally estimated about 55,000 nonfarm jobs were added, well above August’s 22,000. During its September meeting, the Fed forecast the labor market to weaken “substantially” as unemployment rose above its natural rate.

Key Background

Workers with the BLS and the Social Security Administration were recalled to produce September’s inflation data and the SSA’s cost-of-living adjustment, also announced Friday, the Wall Street Journal reported. CPI data released by the BLS is crucial to calculating the SSA’s adjustment, or COLA, which represents the annual increase to monthly Social Security payments. It’s not immediately clear whether the agency or others would work to release similar economic data, like wholesale price data and the BLS’ unemployment report, which is scheduled for release on the first Friday of each month. Before the shutdown, some of Trump’s advisors were reportedly preparing a report detailing errors with the BLS’ jobs data, while the Labor Department’s internal watchdog signaled an investigation was opened into how jobs and inflation data were collected.