Inflation report arrives late, but better than expected

Like that friend who rolls into a party right as you’re clearing the Solo cups, September’s Consumer Price Index showed up late. Still, everyone was thrilled, not only because there’s so little fresh government data to dig through these days that just about any info is better than none, but also because the numbers looked pretty good.

Here’s the gist:

• Headline CPI rose 0.3% month over month, and core inflation (which excludes food and energy costs) climbed 0.2%—both one-tenth of a percentage point cooler than expected.
• Annual headline inflation ticked up to 3.0% from August’s 2.9%, while core CPI eased to 3.0% from 3.1%.

This glimmer of good news was allowed to slip through the four-weeks-and-counting government shutdown after 100 BLS employees were called back to work. Their task? Release the data so that the Social Security Administration could calculate its annual cost-of-living adjustment before the November 1 deadline. Now that that duty’s done, the White House warned that October’s CPI report is unlikely to be released. That gives September’s data even more weight—a lone star on an otherwise empty stage.

What does today’s CPI news mean for markets?

September’s softer-than-expected inflation report all but guarantees that the Federal Reserve will cut rates at its next meeting on October 28–29, bringing the benchmark between 3.75 and 4%, and marking the Fed’s second consecutive cut this year. Markets cheered, sending the S&P 500 to all-time highs.

But despite Wall Street’s exuberance, inflation still remains stubbornly above the Fed’s 2% target. Gasoline led the price gains in September, jumping 4.1% month over month, followed by airfare at 2.7%. Food prices rose a modest 0.2% for the month, but are up 3.1% year over year.

Worried about eggflation? Meet bananaflation: The price of this supposedly “inflation-proof” fruit rose 0.4% last month and has jumped 5.4% since April, when tariffs hit banana farms in Central America. And unlike eggs, you can’t stockpile bananas, so you’re just going to have to eat those costs.

It’s an ominous sign that, although tariffs haven’t triggered massive price spikes yet, some costs are creeping up as companies that have been absorbing higher levies start passing the buck onto consumers. Plus, the longer Capitol Hill remains a ghost town, the murkier forecasts will get—until they eventually dissolve into educated guesses accompanied by a big shrug of, “Who the hell knows?”—JD