What to expect in Friday’s CPI inflation report

Forecasters say inflation is likely to rise to a 17-month high in September, as tariffs push up prices.

The Consumer Price Index report due Friday is likely to show that prices rose 3.1% over the year in December, according to a survey of economists. Dow Jones Newswires and The Wall Street Journal. If the report is in line with expectations, it would be an increase from 2.9% in August and the highest 12-month inflation rate since May 2024.

The rise in inflation would highlight the impact of import taxes imposed by President Donald Trump, which have pushed prices steadily higher in recent months. The index’s year-over-year measure of inflation has risen monthly since April, when Trump announced double-digit tariffs on products from nearly every country in the world. Before that, inflation had been slowing considerably since its post-pandemic peak in 2022. By many measures, inflation was falling roughly to the Fed’s target of an annual rate of 2%.

However, the expected rise is unlikely to be sharp enough to deter Fed officials from cutting interest rates later in October as widely expected. The Federal Reserve cut its benchmark federal funds rate by a quarter of a percentage point in September to support the faltering labor market, as the Fed became more concerned with preventing unemployment than fighting inflation.

Although prices are rising, lower rent increases may prevent the overall inflation rate from rising too much. “Core” inflation, which excludes volatile food and energy prices, is expected to rise 3.1% in September, unchanged from August.

“We expect goods inflation to remain elevated due to the continued pass-through of tariffs, while easing initial shelter-in-place costs should help cool services inflation,” Sarah House and Nicole Cervi, economists at Wells Fargo, wrote in a commentary.

The September CPI report could be particularly noteworthy because it will be one of the few official economic data produced by government statistical agencies during the lockdown that began on October 1. The Bureau of Labor Statistics has brought back some of its furloughed workers to publish the report, which was initially scheduled for release on October 15.