September’s Consumer Price Index (CPI) is anticipated to reveal that inflation remains persistently around 3%, highlighting the challenges tariffs and stable service-sector prices pose to the Federal Reserve’s efforts to reach its 2% inflation target. The report, scheduled for release on Friday at 8:30 a.m. ET, was delayed by the ongoing government shutdown, which has now become the second-longest in U.S. history without a resolution.
Economists surveyed by Bloomberg project the headline CPI will increase by 0.4% month-over-month, consistent with August’s growth, and by 3.1% year-over-year, which is the highest level since May, surpassing the 12-month average of 2.7%. The “core” CPI, which excludes volatile food and energy prices, is expected to show a 0.3% increase for the month and a year-over-year rise of 3.1%, remaining unchanged from August.
Bank of America economist Steven Juneau notes that tariffs are a significant contributor to goods price inflation and are likely to remain a factor in the upcoming quarters, despite an anticipated moderation in the dramatic fluctuations of used car prices that impacted inflation data during the summer months. Juneau cautions that inflation in non-housing services will only slightly ease, as core services like medical care and transportation continue to exhibit strong pricing pressure.
BNP Paribas describes the September CPI as a crucial moment to reassess their economic outlook, indicating that risks may lean towards a lower-than-expected release due to decreasing shelter costs and slight tariff pass-through in goods, which could mitigate seasonal strengths in service categories. They predict core CPI readings may be lower than consensus forecasts for September.
Despite this, BNP anticipates that the impact from tariffs will become more pronounced, foreseeing broader price increases in September that will carry through to the first quarter of 2026. The report suggests that companies have thus far taken a cautious approach to passing on tariff-related costs, with consumers absorbing roughly 20% of these expenses. However, they expect companies to intensify this cost pass-through during the latter part of 2025, with consumers likely bearing the bulk of these costs by early 2026.
Wall Street is reflecting these concerns, with Goldman Sachs’ team, led by Jan Hatzius, identifying a dynamic tension between easing goods prices and the lasting effects of tariffs. They expect a decline in September’s inflation spikes from airfares and used cars, countered by rising costs in food and energy sectors. Nevertheless, Goldman asserts that tariffs will continue to elevate monthly inflation figures into the early part of next year, despite an ongoing decline in underlying trend inflation due to diminishing contributions from housing and labor markets.
This outlook marks a critical juncture for the Federal Reserve, which, under Chair Jerome Powell, is widely expected to implement a rate cut during its next meeting. The interplay of tariffs and inflation remains a complex and evolving challenge for policymakers as they navigate economic recovery.