CPI Report: What September's Inflation Data Means for Your Wallet

After a nine-day delay caused by the government shutdown, the Bureau of Labor Statistics is finally releasing September's Consumer Price Index (CPI) report on Friday. While most federal economic data has been frozen during the political stalemate, this particular report received special clearance for one critical reason: calculating the 2026 Social Security cost-of-living adjustment for 75 million Americans.

The numbers aren't expected to bring relief to households already feeling stretched by rising prices. Economists forecast the CPI climbed 3.1% year-over-year in September, marking the highest inflation rate in 16 months and signaling that President Trump's sweeping tariffs are increasingly hitting consumer wallets.

The Tariff Effect: From Factory Floor to Checkout Counter

When Trump's administration imposed widespread tariffs earlier this year, the immediate impact on consumer prices appeared muted. Companies had stockpiled inventory, absorbed costs through thinner profit margins, and delayed hiring to offset expenses. But those buffers are wearing thin.

According to Goldman Sachs analysis, American companies have now passed along approximately 37% of tariff costs to consumers, forced 9% onto suppliers, and absorbed 51% themselves through August. That's already a substantial hit to shoppers, but it represents a more gradual pass-through than during Trump's first-term tariffs in 2018.

"The tariff impact is increasingly visible, though pass-through remains gradual and uneven," noted EY-Parthenon Chief Economist Gregory Daco. The difference this time? The tariffs are far more extensive and higher than before, making them impossible for consumers to absorb all at once.

Corporate Earnings Reveal the Pressure Points

Recent corporate earnings calls paint a vivid picture of businesses caught between rising costs and consumer resistance to price hikes. General Motors expects to pay between $3.5 billion and $4.5 billion in tariffs this year but has raised vehicle prices by less than 1%. The automaker's North American profit margins compressed from 9% to 6.2% in the third quarter as a result.

Nike anticipates $1.5 billion in tariff costs for its current fiscal year, while toymaker Mattel estimates $100 million in additional expenses. Defense contractor Raytheon paid $220 million in tariff costs in just the third quarter alone.

"Some are trying to squeeze the foreign supplier, and some are trying to improve their own operations, and some are using pricing," explained Michael McAdoo, a partner at consulting firm BCG's global trade and investment group. But increasingly, companies are running out of alternatives to raising prices.

What the Numbers Mean for Consumers

The Friday report is expected to show monthly CPI increased 0.4% in September, matching August's gain. Core CPI, which excludes volatile food and energy prices, is projected to rise 0.3% monthly and 3.1% annually, maintaining elevated pressure across the economy.

While gasoline prices likely provided some upward push, tariffs appear increasingly embedded across multiple categories. Home furnishings and recreational goods have seen particularly swift price increases because so many of those products originate from China. New furniture tariffs announced in recent weeks will only intensify this trend.

"We anticipate the tariff change to result in broad price increases for furniture in the U.S., dampen consumer demand and compressed industry margins in the short term," Derek Schmidt, CEO of furniture maker Flexsteel, told investors.

The Grocery Store Impact

Food prices present a mixed picture. While overall food inflation likely moderated in September compared to August's acceleration, specific items remain stubbornly expensive. Beef and coffee prices stay elevated due to prior droughts and tariffs, creating pain points for families at the checkout counter.

Richard Rosenfeld, owner of Colorado-based tea company Two Leaves and a Bud, recently implemented his company's largest price increase ever. With virtually no tea grown domestically, he has no tariff-free options. "We'll have another price increase absolutely coming soon," Rosenfeld said. "And I can't imagine that we won't have multiple rounds of price increases next year."

Social Security's Silver Lining

Amid the concerning inflation data, there's at least one positive development for retirees. The Social Security Administration is expected to announce a 2026 cost-of-living adjustment around 2.7%, based on inflation from July through September. This would translate to an average monthly increase of $54 for retired workers, raising benefits from $2,008 to $2,062.

While larger than 2025's 2.5% bump, advocates for senior citizens worry this adjustment may not keep pace if prices continue their upward trajectory into next year.

Federal Reserve in Wait-and-See Mode

The Friday inflation report represents the last significant economic data before the Federal Reserve's policy meeting concluding Wednesday. Markets widely expect the central bank to approve another quarter-point interest rate cut despite the sticky inflation readings.

"Because we haven't gotten any government data in the recent past, I think all of the market's focus and all of the market's attention is going to be directed onto this one report," said Troy Ludtka, senior U.S. economist at SMBC Nikko Securities.

The Fed has maintained its forecast that inflation will ease next year, projecting its preferred measure—the Personal Consumption Expenditures index—will drop from 3% in 2025 to 2.6% in 2026. However, those projections assume tariff pressures won't intensify further and that companies continue absorbing some costs rather than fully passing them to consumers.

Growing Concerns About Data Quality

Beyond the inflation numbers themselves, economists are raising red flags about future data reliability. The ongoing government shutdown has suspended CPI data collection for more than half of October's survey period. During the 2013 shutdown, about 75% of October's data was ultimately collected, but this time the disruption is more severe.

"If the shutdown lasts through the end of the month, and the BLS does not adopt new emergency methods, it seems unlikely that it could publish the CPI in the usual way," warned Ronnie Walker, an economist with Goldman Sachs. This uncertainty adds another layer of complexity for policymakers and businesses trying to navigate an already murky economic landscape.

What Comes Next

The trajectory of inflation over the coming months depends heavily on three factors: how much more of their tariff costs companies decide to pass through to consumers, whether the Trump administration scales back any duties, and how resilient consumer spending remains in the face of higher prices.

Timothy Spence, CEO of Fifth Third Bank, noted that while suppliers, importers, and customers are currently each absorbing roughly one-third of tariff costs, "the supplier and the intermediaries have also been clear whenever we talk to them that their intent is ultimately to get back to prior margins. Which would mean over time, you would see continued price increases."

For households already frustrated by years of elevated prices—a recent CBS News poll found 59% of Americans feel the economy is getting worse—the prospect of additional price hikes represents a continuing squeeze on purchasing power.

As Friday's delayed CPI report finally arrives, it will provide crucial confirmation of what many Americans already feel in their daily lives: the cost of living continues climbing, and relief remains frustratingly out of reach. Whether this represents a temporary tariff-induced bump or a more persistent inflationary trend will become clearer in the months ahead—assuming the government shutdown ends and reliable economic data resumes flowing.