September Consumer Prices Rise Less Than Expected, Keeping Rate-Cut Bets Intact

10:50 AM EDT, 10/24/2025 (MT Newswires) -- US consumer prices grew less than expected in September, while core inflation surprisingly ticked down, reinforcing expectations for another interest rate cut next week.

The Bureau of Labor Statistics originally planned to release the September consumer price index report on Oct. 15, but rescheduled it due to the ongoing government shutdown.

The CPI rose 0.3% month on month in September, slower than August's 0.4% climb, which was a seven-month high, the BLS reported Friday. A Bloomberg-polled consensus expected a 0.4% increase.

Annually, inflation accelerated to 3% from August's 2.9%, coming in below Wall Street's 3.1% estimate. The annual index has risen since falling to 2.3% in April this year.

"September's inflation report came in a bit softer than expected, thanks to a sharp cooling in primary shelter costs," Thomas Feltmate, senior economist at TD Economics, said in a report. "Elsewhere, there were plenty of signs to suggest that elevated inflationary pressures are likely to persist in months ahead."

Core inflation, which excludes the volatile food and energy components, slowed to 0.2% from 0.3% in August. The annual core measure eased to 3% from 3.1%. The market expected both measures to remain unchanged.

The annual core rate is the lowest in three months.

Inflation pressures are unlikely to keep the Federal Open Market Committee from delivering another interest rate cut of 25 basis points next week, as central bank officials appear more concerned about a softening labor market, Feltmate said.

"However, hotter readings on subsequent inflation prints could have implications for future decisions, particularly given the growing divide among FOMC members," Feltmate said. "For now, markets are still priced for another 50 basis points of easing by year-end -- a view that aligns to our forecast."

While the September CPI data were collected prior to the government shutdown that began on Oct. 1, Feltmate said that collection rates for October could be impacted because data gathering remains suspended.

"At a minimum, this suggests there could be issues with data quality in the next release, and the longer the shutdown drags on, the greater the risk that the October report is skipped entirely," Feltmate said.

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