A grocery store shopper in Dayton, Ohio, on October 21, 2025.
Kyle Grillot | Bloomberg | Getty Images
On Friday, the Bureau of Labor Statistics released its long-awaited Consumer Price Index report, delayed by a week and a half due to the government shutdown.
The five most important points are:
Inflation remains well above the Federal Reserve’s 2% target, but shows no signs of spiraling out of control and is in fact easing at least slightly in some key areas. The overall rate of increase was 0.3% for the month and 3% for the year, both slightly below consensus expectations. The same was true for core CPI, which excludes food and energy, at 0.2% per month and 3% per year. Markets continue to believe that next week’s Fed rate cut is almost certain, increasing the probability of another rate cut in December. According to CME Group’s FedWatch, there’s only a 4% chance the Fed won’t ease two more times before the end of the year. Apart from the headline numbers, the biggest focus in the market has been the impact on tariffs and immigration, it has become clear. – a bit. Apparel prices rose 0.7% and sporting goods prices rose 1%. However, smartphone prices fell by 2.2% and by 14.9% year-on-year. Gardening and lawn care services, an immigration-related category, recorded an annual increase of 13.9%. Shelter costs are another important category, accounting for a third of the index. There was some comfort on this front, with the index rising just 0.2% on a monthly basis and holding an annualized rate of 3.6%. Owner-equivalent rent, a key component of shelter costs that asks homeowners how much they receive in rent, increased by just 0.1%, the smallest increase from the measure since November 2020. While the shutdown has halted government data collection and reporting, the BLS compiled this report solely to serve as a benchmark for Social Security cost-of-living adjustments. This is therefore likely to be the last official data report until the impasse is resolved.
What they are saying:
“Overall, today’s inflation numbers are encouraging, although they remain above the Fed’s stated 2% inflation target. Still, as inflation breakevens have recently suggested, the overall inflation trend could continue to moderate into next year, and we believe the Fed can maintain its bias toward rate cuts.”
— Rick Rieder, head of fixed income at BlackRock and finalist to replace Jerome Powell as Fed chair next year
“Looking beneath the headlines, we see significant increases in the cost of food, meat, housing, and utilities compared to a year ago. Middle-class and lower-market households experiencing a slowing pace of wage growth are clearly having difficulty adjusting to sustained increases in the cost of living. … Those who are fueling the decline in K are right to ask what those celebrating a modest increase in the pace of price growth are indicating.” Is inflation eating away at my earnings and standard of living? ”
— RSK Chief Economist Joseph Brusuelas on the K-shaped economy
“Signs of tariff spillovers remain weak, supporting the view that higher tariffs will lead to temporary price increases rather than sustained inflationary pressures.”
— Krishna Guha, Head of Global Policy and Central Bank Strategy, Evercore ISM
