The Ching Ching Economic Report: US inflation in September—did it rise or fall, and why?
The US Department of Labor released the Consumer Price Index (CPI) report late last night (14th) Hong Kong time. Economists had previously predicted that the CPI might rise 0.6% month-on-month in September, compared to a 0.4% increase in August.
The year-on-year CPI for September was expected to rise 3.6%, higher than August's 3.4%. (Editor's note: The actual CPI rose 0.6% month-on-month and 3.7% year-on-year.) The Federal Reserve tracks the Personal Consumption Expenditures (PCE) price index and uses it as a reference for its 2% inflation target.
*High inflation fuels public discontent toward the Trump administration*
Earlier surveys showed that consumer confidence deteriorated amid rising cost-of-living concerns, leading to a decline in Trump's approval ratings. Polls indicated that about 78% of Americans blamed rising prices on Trump's policies, including import tariffs and the wars involving the US, Israel, and Iran, with price increases outpacing wage growth.
However, the September CPI report is expected to show a moderate rise in prices for goods excluding the more volatile food and energy categories (Editor's note: The actual core CPI rose 0.3% month-on-month and 2.6% year-on-year). This would further reduce the urgency for the Federal Reserve to raise interest rates again this month.
The September CPI report will be closely watched by millions of retirees and other Social Security recipients attempting to estimate how much their benefits will increase next year. The Social Security Administration uses CPI data for urban wage earners and clerical workers from the third quarter of 2025 to the third quarter of 2026 to determine the annual Cost-of-Living Adjustment (COLA) for Social Security and Supplemental Security Income benefits in 2027. These benefits support retired elderly Americans, as well as disabled individuals, certain widows, widowers, and children.
The Senior Citizens League, one of the largest senior advocacy groups in the US, forecasts that the 2027 COLA will increase by 3.5%, higher than 2026's 2.8%, resulting in an average monthly benefit increase of $67.90 for retirees, bringing the total to $2,007.
The impact of energy price shocks is being closely monitored for signs of spreading beyond the transportation sector. Some economists argue that higher energy prices have not yet embedded into inflation, citing the moderate rise in core CPI. Others warn that diesel prices have reached record highs and with no end in sight to Middle East conflicts, price increases will soon transmit to supermarket prices. They point to elevated price readings in business surveys.
Excluding the more volatile food and energy components, the September CPI is expected to rise 0.2% month-on-month, compared to 0.3% in August. Core CPI inflation is expected to slow in September, reflecting the fading impact of a surge in mobile phone prices caused by AT&T service changes, although an upside surprise cannot be ruled out. Other service providers also raised their fees in September.
Airfare prices may rise further due to higher jet fuel prices. Rents are expected to increase moderately. Goods prices may rise slightly as the impact of tariffs fades. The 12-month core CPI inflation for the period ending in September is expected to rise 2.5%, up from 2.4% in August. This indicator lags behind core PCE inflation, which rose 3.0% in August due to different weightings of components in the basket.
In summary, US CPI in September showed both increases and decreases, because the government moved the goalposts—the intention is clearly to avoid further rate hikes.
How did they move the goalposts? To be continued. —Senior Investor, Shek King-chuen
(Investing involves risk, and each investor's risk tolerance varies; independent thinking is essential. The author may trade based on market conditions.)
*Articles published in Economic Times under named or unnamed authors represent the authors' personal opinions and do not reflect the stance of Economic Times. The role of Economic Times is to provide a platform for free expression.
The US Department of Labor released the Consumer Price Index (CPI) report late last night (14th) Hong Kong time. Economists had previously predicted that the CPI might rise 0.6% month-on-month in September, compared to a 0.4% increase in August.
The year-on-year CPI for September was expected to rise 3.6%, higher than August's 3.4%. (Editor's note: The actual CPI rose 0.6% month-on-month and 3.7% year-on-year.) The Federal Reserve tracks the Personal Consumption Expenditures (PCE) price index and uses it as a reference for its 2% inflation target.
*High inflation fuels public discontent toward the Trump administration*
Earlier surveys showed that consumer confidence deteriorated amid rising cost-of-living concerns, leading to a decline in Trump's approval ratings. Polls indicated that about 78% of Americans blamed rising prices on Trump's policies, including import tariffs and the wars involving the US, Israel, and Iran, with price increases outpacing wage growth.
However, the September CPI report is expected to show a moderate rise in prices for goods excluding the more volatile food and energy categories (Editor's note: The actual core CPI rose 0.3% month-on-month and 2.6% year-on-year). This would further reduce the urgency for the Federal Reserve to raise interest rates again this month.
The September CPI report will be closely watched by millions of retirees and other Social Security recipients attempting to estimate how much their benefits will increase next year. The Social Security Administration uses CPI data for urban wage earners and clerical workers from the third quarter of 2025 to the third quarter of 2026 to determine the annual Cost-of-Living Adjustment (COLA) for Social Security and Supplemental Security Income benefits in 2027. These benefits support retired elderly Americans, as well as disabled individuals, certain widows, widowers, and children.
The Senior Citizens League, one of the largest senior advocacy groups in the US, forecasts that the 2027 COLA will increase by 3.5%, higher than 2026's 2.8%, resulting in an average monthly benefit increase of $67.90 for retirees, bringing the total to $2,007.
The impact of energy price shocks is being closely monitored for signs of spreading beyond the transportation sector. Some economists argue that higher energy prices have not yet embedded into inflation, citing the moderate rise in core CPI. Others warn that diesel prices have reached record highs and with no end in sight to Middle East conflicts, price increases will soon transmit to supermarket prices. They point to elevated price readings in business surveys.
Excluding the more volatile food and energy components, the September CPI is expected to rise 0.2% month-on-month, compared to 0.3% in August. Core CPI inflation is expected to slow in September, reflecting the fading impact of a surge in mobile phone prices caused by AT&T service changes, although an upside surprise cannot be ruled out. Other service providers also raised their fees in September.
Airfare prices may rise further due to higher jet fuel prices. Rents are expected to increase moderately. Goods prices may rise slightly as the impact of tariffs fades. The 12-month core CPI inflation for the period ending in September is expected to rise 2.5%, up from 2.4% in August. This indicator lags behind core PCE inflation, which rose 3.0% in August due to different weightings of components in the basket.
In summary, US CPI in September showed both increases and decreases, because the government moved the goalposts—the intention is clearly to avoid further rate hikes.
How did they move the goalposts? To be continued. —Senior Investor, Shek King-chuen
(Investing involves risk, and each investor's risk tolerance varies; independent thinking is essential. The author may trade based on market conditions.)
*Articles published in Economic Times under named or unnamed authors represent the authors' personal opinions and do not reflect the stance of Economic Times. The role of Economic Times is to provide a platform for free expression.
