US consumer prices rose less than expected in September, offering fresh evidence that inflation pressures continue to moderate and bolstering expectations the Federal Reserve could begin easing rates later this year.
The Consumer Price Index (CPI) increased 0.3% from August and 3% from a year earlier, below forecasts of 0.4% and 3.1%, respectively, the Labor Department said on Friday.
Core CPI, which excludes volatile food and energy components, climbed 0.2% on the month and 3% annually, both undershooting estimates.
Apparel prices were among the biggest gainers, up 0.7%, likely reflecting higher import duties.
Analysts noted the details of the report highlight both areas of persistent pressure and signs of easing in the broader economy.
“September’s CPI tells a familiar story — inflation is cooling, but not convincingly enough,” said Gina Bolvin, president of Bolvin Wealth Management Group in Boston. “Core inflation is stuck near 3%, which means the Fed will stay cautious. Today’s report doesn’t slam the door on rate cuts, but it narrows the path.”
Jeffrey Roach, chief economist at LPL Financial, noted that inflation for big-ticket items such as used vehicles and housing continued to cool. “Housing prices are decelerating and should slow further amid the growing supply of multifamily housing and shrinking demand from lower immigration,” he said. Roach expects annual inflation to drop below 3% in the coming months, adding that tariff-related pressures likely drove the rise in apparel costs.
Some investors see the latest data as supportive of the Fed’s easing plans. “Much like a Sherlock Holmes’ story, inflation is the dog that didn’t bark,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “This report does nothing to stop the Fed from a 25-basis-point cut next week, and corporate profits are continuing to increase.”
Nigel Green, CEO of the deVere Group, said the focus is shifting from prices to jobs. “The inflation data was anticipated, and it’s no longer the deciding factor,” he said. “The Fed’s attention has turned squarely to the labour market. Without jobs data due to the government shutdown, policymakers may have to make one of the year’s biggest decisions without their clearest guide to economic health.”