Consumer prices in the United States rose 3% over the twelve months ending September 2025, according to the latest figures from the Bureau of Labor Statistics (BLS). On a monthly basis, the overall index increased by 0.3%, down from 0.4% in August. Core inflation, which excludes volatile food and energy, also rose by 3% year-over-year.
The data arrived amid a partial U.S. government shutdown, yet the BLS prioritized release of the CPI report to enable the Social Security Administration to calculate next year’s cost-of-living adjustment.
Why Inflation Didn’t Cool as Expected
Despite prior signs of deceleration, inflation remained elevated in September. One key driver was a 4.1% rise in gasoline prices for the month, leading the energy component higher.
Food costs increased modestly (+0.2% monthly), but the annual increase for food stood at 3.1%, underscoring lingering pressure on household spending.
Shelter costs, typically a persistent inflation driver, recorded a slower monthly uptick – with owners’ equivalent rent rising 0.1%, its smallest gain since early 2021.
Economists noted that tariff pass-through effects, a firmer U.S. dollar, and continued wage growth contributed to sticky prices. The shutdown of government operations also complicates future data collection, raising concerns about the October inflation report.
Implications, Risks & What to Watch
For policymakers at the Federal Reserve, the data presents a mixed signal. On one hand, monthly increases have slowed; on the other, the 3% year-over-year pace remains above the Fed’s 2% target.
The Fed cut rates in September, and markets had anticipated further easing – but the persistence of inflation suggests any additional rate cuts may be delayed or smaller than expected.
For consumers and investors, the takeaway is that price-stability risks remain. A slowdown in shelter inflation offered some relief, but elevated fuel and import-sensitive goods continue to pose upside risks to headline inflation.
Upcoming indicators to watch include producer prices, wage growth, and the next CPI reading for October – particularly given data gaps caused by the government shutdown. If inflation reaccelerates, markets may reprice expectations for rate cuts and long-term bond yields could move higher.
As previously covered, inflation remains the central pivot for monetary policy – and while September’s figures show modest improvement, the fight against persistent price pressures is far from over.
