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Everyone is waiting for Friday’s big inflation report. Here’s what to expect
A shopper looks at produce at a grocery store in West Milton, Ohio, US, on Tuesday, Oct. 21, 2025.
Kyle Grillot | Bloomberg | Getty Images
The Friday release of September’s consumer price index report is pretty much the only game in town this month for a Wall Street that is hungry for data, raising the chances for it to be a market-moving event.
While the actual numbers are expecting to land about where they’ve been in recent months, the dearth of official economic reports, thanks to the government shutdown, means even a slight deviation could cause an outsized impact.
“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. “This is going to be the report to end all reports.”
As far as the Wall Street consensus goes, though, the CPI release from the Bureau of Labor Statistics looks to be more of the same.
Economists surveyed by Dow Jones expect the monthly all-items reading to increase by 0.4%, the same as a month ago, putting the 12-month inflation rate at 3.1%, or 0.2 percentage point higher than the August level. Excluding food and energy, core CPI is projected to show a 0.3% monthly increase and a 3.1% annual level, both the same as in August. The yearly rate would be the highest since January.
What the Street will be looking for is any deviation in the readings showing that inflation is running hotter or colder than anticipated. The focus also will be on the details showing what impact President Donald Trump’s tariffs are having on prices.
The report, which was supposed to be released Oct. 15, will be the last significant economic reading before the Fed’s policy meeting that concludes Wednesday. The BLS called workers back because it uses CPI as a benchmark for Social Security cost of living adjustments.
Lack of clarity
Goldman Sachs economists expect little change on auto prices, a boost on car insurance and a decline in airfare. On the tariff issue, the firm said in a note that it expects “upward pressure” on categories such as communication, household furnishings and recreation, but an addition of just 0.07 percentage point to the core inflation figure.
However, data in general is a black box with so much of the government shut down, raising some questions over the reliability of the CPI.
“We don’t have full clear clarity with the lack of important data points that the market depends on due to the government shutdown,” said Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management. “So that adds to the uncertainty a little bit more.”
Indeed, investors have been on tenterhooks lately, pushing major stock market averages to around record territory despite continued fluctuation in day-to-day moves.
Geopolitical uncertainty is at the root of concerns, with the ever-shifting tariff landscape injecting worry that higher prices could slow what has been an otherwise surprisingly strong pace of economic growth. The CPI report, despite concerns about how clean the data will be due to shutdown-related disruptions, should help answer at least some of those questions.
That applies both to markets and the Federal Reserve, which holds a policy meeting next week at which officials are widely expected to approve another quarter percentage point interest rate cut.
“In terms of market impact, it would take a meaningful surprise to the upside for the market to change its mind about an additional interest rate cut,” said Julien Lafargue, chief market strategist at Barclays Private Bank.
Outside of the trade war’s frequent gyrations, markets have been boosted by another strong earnings season. Prior to the lockdown, economic data also had shown a surprisingly resilient economy, with gross domestic product tracking close to 4% for the third quarter, according to the Atlanta Fed.
While it would take something of consequent to shake that narrative, a surprise from CPI might just be the ticket.
“I would expect volatility if the number comes in higher than expected,” said Stephanie Link, chief investment strategist at Hightower Advisors. “I would view that as a buying opportunity as the economy is strong, the Fed is beginning a cutting cycle, EPS are growing double digits and the fourth quarter is seasonally the strongest quarter of the year.”
