A shopper at a grocery store in Dayton, Ohio, October 21, 2025.
Kyle Grillot | Bloomberg | Getty Images
The Bureau of Labor Statistics released its highly anticipated Consumer Price Index report on Friday, which was delayed a week and a half due to the government shutdown.
Here are the five key takeaways:
- While inflation is still well above the Federal Reserve’s 2 percent target, it shows no signs of getting out of hand and is actually easing at least somewhat in some key areas. Total gains of 0.3% monthly and 3% annually were both slightly below consensus forecasts. The same applies to the core CPI excluding food and energy, which was 0.2% monthly and 3% annually.
- Markets continued to price a Fed rate cut next week as a near certainty, raising the odds of another one in December, with the odds that the central bank won’t ease rates twice before the end of the year at just 4%, according to CME Group’s FedWatch.
- Aside from the headlines, the biggest point of observation for the markets that emerged was the impact on tariffs and immigration – a little bit. Clothing prices rose 0.7% and the cost of sporting goods rose 1%. But smartphone prices fell 2.2% and are down 14.9% year-on-year. Garden and lawn care services, an immigration-related category, saw an annual increase of 13.9%.
- Accommodation costs are another important category, as they account for a third of the weight in the index. There was some relief on that front: the index rose just 0.2% monthly and remained at 3.6% annually. Owner-equivalent rent, a crucial component of housing costs that asks homeowners what they could get in rent, rose just 0.1%, the smallest such increase for the measure since November 2020.
- Because government data collection and reporting was suspended due to the shutdown, the BLS prepared this report solely for its role as a measure of Social Security cost-of-living adjustments. So this will likely be the last official data report released until the standoff is resolved.
What they say:
“Overall, today’s inflation readings are encouraging, although still above the Federal Reserve’s 2% inflation target. Nonetheless, we expect the overall inflation trend may weaken further next year… as inflation breakevens have recently suggested, allowing the Fed to maintain its bias toward rate cuts.”
– Rick Rieder, head of fixed income at BlackRock and a finalist to replace Jerome Powell as Fed chief next year
“Look below the headline and you see a sharp increase in the cost of food, meat, housing and utilities on a year-over-year basis. Middle-class and lower-class households, which are experiencing a slower pace of wage growth, are clearly struggling to adjust to the continued rise in the cost of living… It is only natural for those who inhibit the lower spur of the K to ask: What are those who are seeing a… celebrate a more modest increase in the pace of price increases that points to inflation?” Doesn’t that undermine my bottom line and my standard of living?”
— Joseph Brusuelas, chief economist at RSK, on the K-shaped economy
“Evidence of tariff spillover effects remains weak, supporting the view that tariff increases will result in a one-off price increase rather than sustained inflationary pressures.”
— Krishna Guha, head of global policy and central bank strategy at Evercore ISM
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