What Did the Delayed Inflation Report Say?

The Bureau of Labor Statistics’ (BLS) government-shutdown-delayed September inflation report showed CPI ticking up to 3.0% y/y from August’s 2.9% but accelerating less than the 3.1% consensus analyst forecast.^[i] This slower-than-expected read continues to support our view that tariffs aren’t stoking inflation materially—which the details echo. It also has noteworthy personal finance implications for many retirees. Let us walk through the figures.

Exhibit 1 shows headline CPI waffling between 2.3% y/y to 3.0% since June 2024. Leading the monthly uptick: gasoline prices’ 4.1% m/m rise.^[ii] Excluding food and energy, core CPI slowed to 3.0% y/y from August’s 3.1%.

Exhibit 1: No PCE Data, But CPI Gives a Hint

Source: Bureau of Economic Analysis and BLS, as of 10/24/2025. PCE Price Index, October 1975 – August 2025, and CPI, October 1975 – September 2025.

The headline rise in September likely means the Fed’s targeted Personal Consumption Expenditure (PCE) price index is still above its 2% target, as it closely parallels CPI. We won’t know that for sure until the shutdown ends, but this strongly hints in that direction. August’s PCE price index inflation was already 2.7% y/y, so a small uptick in CPI suggests PCE likely didn’t get materially closer to the target in September. Not that this matters much—there is no evidence the Fed can fine-tune inflation down to the decimal point.

While the big fear is tariffs’ spiking prices, they appear to be having minimal effect so far. CPI’s core goods component has risen month over month for four straight months, suggesting some sway. But core goods are up just 1.5% y/y.^[iii] Purchasing managers’ indexes, business surveys with an array of subindexes, show that although many US firms are paying more for imported goods, they mostly aren’t passing on price increases, perhaps fretting potential lost market share. Moreover, tariff-sensitive goods comprise just a small portion of CPI—only about 10%—so any contribution to headline inflation is tiny.^[iv]

Meanwhile, core services have decelerated month over month since July. At 3.5% y/y, core services inflation is the slowest since 2021.^[v] As we have explored before, this is largely driven by shelter prices (58% of core services). With home prices’ ongoing deceleration nationally to 1.5% y/y in August (see Exhibit 2) and approximately 15-month lead over CPI’s main shelter components, core services inflation looks likely to keep trending lower for the foreseeable future.^[vi] And its influence on overall inflation far outweighs tariffs’.

Exhibit 2: Home Price Growth and Shelter Costs Continue Decelerating

Source: FactSet, as of 10/24/2025. S&P/Case-Shiller National Home Price Index, January 1990 – August 2025, and CPI: Shelter, January 1990 – September 2025. We advanced the Home Price Index 15 months for illustrative purposes.

Besides, inflation is caused by too much money chasing too few goods and services—and there is little sign money supply growth is excessive. As Exhibit 3 shows, broad M4 money supply growth is back at rates that prevailed prepandemic—when inflation was mostly below the Fed’s 2% target. With money supply tame and no shortage of goods and services, inflation seems unlikely to run wild.

Exhibit 3: Tame Money Supply Growth Checks Inflation

Source: Center for Financial Stability and BLS, as of 10/24/2025. Divisia M4 (including US Treasurys), October 1975 – August 2025, and CPI, October 1975 – September 2025. We advanced M4 18 months for illustrative purposes.

So the headline-grabbing story—tariffs—doesn’t really rate in these data. Nor do they support lingering hot inflation fears.

The biggest impact from September’s inflation report? How it affects the personal finances of those taking Social Security. A federally mandated Cost-of-Living Adjustment (COLA) based on CPI-W—that is, for “urban wage earners and clerical workers” versus the headline CPI’s “all urban consumers”—is why the BLS released its inflation figures despite the shutdown.

Social Security uses CPI-W’s Q3 monthly average (its mean year-over-year change in July, August and September) to calculate next year’s COLA. With September now in, 2026’s will be 2.8%.^[vii] On average, this means monthly Social Security checks will increase about $56 starting in January. Of course, depending on individual circumstances, your mileage may vary. But those receiving benefits will get a bump in 2026, a factor recipients should note when planning next year’s budget.

Hat tip: Research Specialist Nicole Broersma and Research Analyst Ben Lederer