US CPI Inflation Slows to 3% in September, Below Forecasts

US consumer inflation rose less than expected in September, offering fresh evidence that price pressures are continuing to ease and reinforcing expectations that the Federal Reserve will move ahead with another interest rate cut next week.

The Consumer Price Index (CPI) increased 0.3% monthly and at an annual rate of 3.0%, according to data released Friday by the Bureau of Labor Statistics (BLS). Economists surveyed by Bloomberg had forecast a slightly higher 0.4% monthly rise and an annual rate of 3.1%. The figure marks a mild uptick from August’s 2.9% but remains consistent with a gradual disinflation trend.

Core inflation, which excludes volatile food and energy prices, rose 0.2% on the month and 3.0% from a year earlier, both below expectations and steady compared to August. Energy prices climbed 4.1% in September, led by higher gasoline costs, while food prices increased by 0.2%. Shelter costs, which account for about one-third of the CPI, rose just 0.2%, the slowest pace in several months.

Markets reacted positively to the data: US Treasury yields edged lower, with the two-year yield falling to 3.44%, while stock futures extended gains, and the dollar weakened 0.12% against a basket of major currencies.

The inflation report, the only major economic data released amid the ongoing US government shutdown, provides key input for the Federal Reserve’s policy decision due next week. The Fed is widely expected to lower its benchmark rate by another 25 basis points, following its September cut to a range of 4%-4.25%. Traders are also pricing in another reduction before year-end.

Policymakers remain divided over how quickly to ease monetary policy, as they weigh lingering inflation risks against signs of cooling in the labor market. The data adds to the Fed’s confidence that inflation is trending closer to its 2% target, though uncertainties persist over the impact of President Donald Trump’s new tariffs and the broader slowdown in hiring.

Despite those risks, analysts say the softer-than-expected inflation figures bolster the case for further rate cuts to support growth. The CPI release, delayed by the shutdown, was made public to ensure Social Security cost-of-living adjustments can be calculated on time for 2026 payments.