U.S. inflation remained elevated last month as the costs of some imported goods rose while rental prices cooled.
Consumer prices increased 3% in September from a year earlier, the Labour Department said Friday (October 24, 2025), up from 2.9% in August. Excluding the volatile food and energy categories, core prices also rose 3%, a decline from 3.1% in the previous month. Both figures are above the Federal Reserve’s 2% target.
The report on the consumer price index is being issued more than a week late because of the government shutdown, now in its fourth week. The Trump administration recalled some Labour Department employees to produce the figures because they are used to set the annual cost-of-living adjustment for roughly 70 million Social Security recipients.
The figures reflect a smaller increase than many economists had forecast, and will likely encourage the Federal Reserve to cut its key interest rate when it meets next week for the second time this year.
Friday’s (October 24) inflation report is likely to show that consumer prices worsened in September for the second straight month as President Donald Trump’s tariffs have lifted the cost of some groceries and other goods.
The report on the consumer price index is being issued more than a week late because of the government shutdown, now in its fourth week. The Trump administration recalled some Labour Department employees to produce the figures because they are used to set the annual cost-of-living adjustment for roughly 70 million Social Security recipients.
Friday’s inflation report will be the first comprehensive economic data to be released in more than three weeks and will attract intense interest from Wall Street and officials at the Federal Reserve. Fed officials are cutting their short-term interest rate to buoy the economy and hiring, but they are taking some risk doing so because inflation is still above their 2 per cent target.
The issues of affordability and the cost of necessities are gaining in political importance. Concerns over the costs of rent and groceries have played a key role in the mayoral race in New York City. And Mr. Trump, who has acknowledged that the spike in grocery prices under President Joe Biden helped him win the 2024 election, has been considering importing Argentine beef to reduce record-high US beef prices, angering U.S. cattle ranchers.
The cost of ground beef has jumped to $6.32 a pound, a record, in part because of tariffs on imports from countries such as Brazil, which faces a 50% duty. Years of drought that have reduced cattle herds have also raised prices.
Friday’s (October 24) report is forecast to show that inflation rose 3.1% in September from a year earlier, according to a survey of economists by data provider FactSet. That would be up from 2.9% in August and the highest in 18 months. On a monthly basis, inflation is projected to be 0.4%in September, the same as in August.
Excluding the volatile food and energy categories, core inflation in September was likely 3.1 per cent for the third straight month. On a monthly basis, core prices likely rose 0.3%, economists project, also for the third straight month.
Such figures are unlikely to deter the Fed from cutting its key rate by another quarter-point when it meets next week, to about 3.9 per cent. It would be the second cut this year and is driven by Fed Chair Jerome Powell’s concerns that hiring is weakening and poses a threat to the economy.
Even as inflation has fallen sharply from its peak of 9.1% more than three years ago, it remains a major concern for consumers. About half of all Americans say the cost of groceries is a “major” source of stress, according to an August poll by The Associated Press-NORC Centre for Public Affairs Research.
And the Conference Board, a business research group, finds that consumers are still referencing prices and inflation in responses to its monthly survey on consumer confidence.
Still, inflation has not risen as much as many economists feared when Mr. Trump first announced a sweeping set of tariffs. Many importers built up inventories of goods before the duties took effect, while Mr. Trump reduced many import taxes, including as part of trade deals with China, the United Kingdom, and Vietnam.
And many economists, as well as some Fed officials, expect that the tariffs will create a one-time lift to prices that will fade by early next year. At the same time, inflation excluding the tariffs is cooling, they argue: Rental price increases, for example, are declining on average nationwide.
Yet President Trump is imposing tariffs in an ongoing fashion that could raise prices in a more sustained fashion.
For example, the Trump administration is investigating whether to slap 100 per cent tariffs on imports from Nicaragua over alleged human rights violations. The prospect of such steep duties is a major headache for Dan Rattigan, the co-founder of premium chocolate maker French Broad, based in Asheville, N.C.
“We’ve been shouldering some significant additional costs,” Mr. Rattigan said. The United States barely produces any cocoa, so his company imports it from Nicaragua, the Dominican Republic, and Uganda. The imports from Nicaragua were duty-free because the country had a trade agreement with the United States, but now faces an 18% import tax.
Cocoa prices have more than doubled over the past two years because of poor weather and blights in West Africa, which produces more than 70% of the world’s cocoa. The tariffs are an additional hit on top of that. Mr. Rattigan is also paying more for almonds, hazelnuts, and chocolate-making equipment from Italy, which has also been hit with tariffs.
French Broad raised its prices slightly earlier this year and doesn’t have any plans to do so again. But after the winter holidays, “all bets are off … in what is a very unpredictable business climate,” Mr. Rattigan said.
Published – October 24, 2025 07:37 pm IST
