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Inflation
Executive summary
U.S. headline CPI was 3.0% year‑over‑year in September 2025, up from 2.9% in August, and many official and private trackers show inflation running above the Federal Reserve’s 2% objective even as it moderates from earlier peaks [1] [2]. Policymakers and forecasters are debating whether that “above‑target” pace — with services and food pressure visible in category breakdowns — means further rate restraint or room for cuts; shutdown disruptions to BLS data collection add uncertainty for October and November readings [3] [4] [5].
1. Where inflation stands now: modestly above target
Multiple data compilations and government statements put headline CPI in the ballpark of 3.0% for the 12 months ending September 2025, a step down from the double‑digit and mid‑single‑digit spikes earlier in the decade but materially above the Fed’s 2% goal [1] [2]. Analysts such as Reuters and the Treasury’s report characterize the recent multi‑year average as higher than the pre‑COVID era — Reuters cites a 2.7% average for 2023–2025, framing a “higher inflation regime” than the 2012–2020 average [6] [2].
2. Which prices are pulling most of the weight
Detailed category breakdowns show uneven inflation: essentials like food and home services are exerting upward pressure while technology, apparel, and some energy items have declined year‑over‑year, according to a Visual Capitalist compilation using BLS data [3]. That split — rising services and sticky core components versus falling goods prices in some sectors — is important because services inflation tends to be more persistent and influences longer‑run inflation expectations [3].
3. Why the Fed and markets are split on policy implications
Federal Reserve officials and market analysts are weighing the same data differently. Atlanta Fed commentary highlights that firms expect price increases to persist into 2026 and that tariffs and other cost channels contribute meaningfully to firms’ price plans, warning that inflation remains “materially above” the FOMC’s 2% objective [4]. Meanwhile, private forecasters and banks like RBC still model modest rate cuts in December and January if the data cooperate, but they caution that missing or imputed BLS releases complicate the outlook [7].
4. Data uncertainty after the government shutdown
A recent government shutdown interrupted BLS collections, meaning October (and potentially November) CPI and jobs data were delayed or may require imputation; the White House and reporting outlets warned some months might never be released, creating an unusual data‑visibility problem for the Fed and markets ahead of key meetings [5] [8] [7]. Market polls showed many economists still expect a December rate cut, but those forecasts explicitly note the added uncertainty from missing official releases [8] [7].
5. Real‑time tools and “nowcasts” to the rescue
To navigate gaps, institutions like the Cleveland Fed produce daily nowcasts for CPI and PCE using high‑frequency inputs (oil, gasoline, partial price series) to estimate where inflation stands before full official releases; these models are designed specifically to give policymakers and markets a sense of “where inflation is today” when monthly CPI/PCE readings are delayed [9] [10]. These estimates are useful but are model‑based and rely on selected series, so they are not a full substitute for BLS/BEA official statistics [9].
6. Competing narratives: political framing vs. technical assessment
Political actors present divergent takes: the White House in a November piece credited the administration for reducing inflation to an average of 2.7% during a political term, framing progress as a policy win [11]. Journalistic and technical outlets emphasize nuance — inflation has moderated from its peak but remains above target and uneven across categories, and technical factors (tariffs, services stickiness) complicate a simple political scorecard [6] [4]. Readers should treat politicized averages and causal claims cautiously and compare them to the underlying BLS and Fed analyses cited above [2] [4].
7. Bottom line and what to watch next
Expectations for policy will hinge on the next credible price and jobs releases: whether missing months are imputed or recovered will matter. Watch official CPI/PCE releases (when they return), Cleveland Fed nowcasts for interim signals, firms’ pricing intentions in surveys cited by the Atlanta Fed, and markets’ reaction to any Fed commentary about inflation persistence versus easing [9] [4] [5]. Available sources do not mention longer‑term structural forecasts beyond the near term without further data (not found in current reporting).