The upcoming release of inflation data on Friday is anticipated to provide essential insights regarding U.S. price trends. Economists predict that the Consumer Price Index (CPI) for September may reflect the highest annual increase in 16 months, potentially rising by 3.1%. This acceleration marks a significant change since the CPI reached 3.3% in May 2024.
Scheduled Release and Economic Context
The Bureau of Labor Statistics is set to publish the September CPI report at 8:30 a.m. Eastern Time. This release is notably delayed, occurring nine days later than originally scheduled due to the recent U.S. government shutdown, which temporarily halted many federal data releases.
However, the Department of Labor made an exception for the CPI data due to its importance in determining the annual cost-of-living adjustment (COLA) for Social Security beneficiaries. This adjustment will also be announced on Friday.
Inflation Trends and Causes
Inflation has steadily increased this year, drifting away from the Federal Reserve’s target of 2%. Economists attribute part of this rise to tariffs implemented during the Trump administration. U.S. companies importing goods are absorbing around 55% of these tariffs, which are directly passed to consumers as increased prices.
- September CPI increase expected: 3.1%
- Projected highest annual increase since May 2024 (3.3%)
- Federal Reserve’s inflation target: 2%
Impact on Consumer Sentiment and Social Security
The rising inflation rate has led to deteriorating economic sentiment among Americans. A CBS News poll indicated that 59% believe the economy is worsening, with close to two-thirds noticing increased prices in recent weeks.
This inflation trend has implications for Social Security COLA. The adjustment is expected to be approximately 2.7%, which is a slight increase over the 2.5% adjustment in 2025. This rise will result in an increase of about $54 in average monthly benefits for retirees, raising their payments from $2,008 to $2,062.
Future Inflation Outlook
Despite the recent inflation increase, the Federal Reserve and many economists foresee a decrease in inflation rates in the coming year. The Fed’s September forecast predicts that Personal Consumption Expenditures—a preferred measure of inflation—will indicate a 3% rise in 2025, declining to 2.6% in the following year.
While the influence of U.S. tariffs on inflation has been less pronounced than expected, uncertainties remain. According to Seema Shah, chief global strategist at Principal Asset Management, companies have managed to mitigate some inflationary impacts by increasing inventories and absorbing costs. However, should these strategies falter, consumers might soon face higher prices.
- Expected COLA for Social Security beneficiaries: 2.7%
- Average monthly payment increase: $54
- Projected inflation rate in 2025: 3%
- Projected inflation rate for the following year: 2.6%
As inflationary pressures continue, there remains a risk that these could extend beyond goods into services, indicating a more entrenched inflation trend.
