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Friday’s inflation report is likely to show that consumer prices worsened in September for the second consecutive month as President donald trumpTariffs have increased the cost of some groceries and other items.
The release of the report on the Consumer Price Index is being delayed by more than a week due to the government shutdown, which is now in its fourth week.
Trump administration recalled some labor department Staff must prepare the figures as they are used to determine annual cost of living adjustments for about 70 million Social Security recipients.
Friday’s inflation report will be the first macroeconomic data released in more than three weeks and will draw keen interest from Wall Street and Federal Reserve officials.
Fed officials are cutting their short-term interest rates to boost the economy and make hiring decisions, but they are taking some risks in doing so as inflation is still above their 2% target.
Issues of affordability and cost of necessities are gaining political importance. Concerns over the cost of rent and groceries have played a significant role in the mayoral race in New York City.
And Trump, who has acknowledged that grocery prices have risen under the presidency. Joe Biden helped him win the 2024 election Argentina is considering importing beef to offset record-high US beef prices, angering US cattlemen.
The price of ground beef has reached $6.32 per pound, a record, due to tariffs on imports from some countries. brazilOn which 50% fee is charged. Years of drought have reduced livestock numbers and increased prices.
Friday’s report showed inflation rose 3.1% in September from a year earlier, according to a survey of economists by data provider FactSet. This would be more than 2.9% in August and the highest in 18 months. On a monthly basis, inflation in September is estimated to be 0.4%, similar to August.
Excluding volatile food and energy categories, core inflation in September is likely to be 3.1% for the third consecutive month. Economists estimate that on a monthly basis, core prices are likely to rise 0.3% for the third consecutive month.
Such data is unlikely to prevent the Fed from cutting its key rate by another quarter-point, to about 3.9%, at its meeting next week. This will be the second cut this year and is being driven by the Fed Chair jerome powellThere are concerns that hiring is weakening and the economy is at risk.
Even though inflation has fallen sharply from a high of 9.1% three years ago, it still remains a major concern for consumers. Nearly half of Americans say the price of groceries is a “major” source of stress, according to an August survey by The Associated Press-NORC Center for Public Affairs Research.
And the Conference Board, a business research group, found that consumers are still referencing prices and inflation in responses to its monthly survey on consumer confidence.
Still, inflation has not surged as much as many economists feared when Trump first announced the sweeping set of tariffs. Many importers stockpiled goods before the tariffs were implemented, while Trump reduced many import taxes, including as part of trade deals with China, the United Kingdom and Vietnam.
And many economists, as well as some Fed officials, expect the tariffs to lead to an outright increase in prices that will subside by early next year. At the same time, inflation excluding tariffs is declining, he argues: Rental price increases, for example, are declining on average across the country.
Yet Trump continues to impose tariffs that could lead to even more sustained price increases.
For example, the Trump administration is investigating whether to impose a 100% tariff on imports from Nicaragua over alleged human rights violations. The prospect of such hefty fees is a big headache for Dan Rattigan, co-founder of French Broad, a premium chocolate maker based in Asheville, NC.
“We are incurring some significant additional costs,” Rattigan said. The United States barely produces cocoa, so his company imports it from Nicaragua, the Dominican Republic, and Uganda. Imports from Nicaragua used to be duty-free because the country had a trade agreement with the United States, but now face an 18% import tax.
Cocoa prices have more than doubled in the past two years due to bad weather and blight in West Africa, which produces more than 70% of the world’s cocoa. On top of that the tariffs are an additional hit. Rattigan is also paying more for almonds, hazelnuts and chocolate-making equipment from Italy, which has also been hit by the tariffs.
The French broad raised its prices slightly earlier this year and has no plans to do so again. But after the winter holidays, “all bets are off in a very unpredictable business environment,” Rattigan said.