Inflation Insights: Will Rising Prices Affect Fed's Interest Rate Decision?

U.S. consumer prices likely rose solidly in September, driven by increased costs in tariff-sensitive goods. Despite elevated inflation, the Federal Reserve is expected to cut interest rates. The government shutdown may affect future data collection and publication, raising concerns about the quality of October's CPI report.

U.S. consumer prices are on an upward trajectory for the second consecutive month in September, primarily due to increased costs in tariff-sensitive goods. However, despite the elevated inflation, experts believe it won't deter the Federal Reserve from lowering interest rates next week.

The Consumer Price Index report, which will be published Friday, is likely to show underlying inflation remained solid, with some price moderation in services like air travel and hotel accommodations. However, goods inflation is expected to stay high, influenced by persistent tariff pass-throughs.

Experts voice concerns over the impending release of October's CPI report amid the government shutdown, which has disrupted data collection. Currently, economists estimate that only about 50% of the necessary data is available, complicating a timely and accurate report presentation.

(With inputs from agencies.)