Inflation rises in October due to falling consumer sentiment
Will this affect the Fed when it meets next week on interest rates?
that the inflation rate has risen In September, it wasn’t as good as expected, but Consumer sentiment fell In October.
two Key report released on Friday We must continue to picture a mixed and uncertain economic picture.
The Consumer Price Index (CPI) was released Friday despite the government shutdown halting the release of federal economic data.
The Bureau of Labor Statistics (BLS) said this announcement allows the Social Security Administration to determine Social Security cost-of-living adjustments (COLAs). “No other releases will be rescheduled or produced until regular government service resumes,” according to the BLS.
Last month, the inflation rate rose 0.3%The September CPI showed a decrease from 0.4% in August. This is better than the 0.4% increase in September predicted by economists.
that The 12-month inflation rate was 3.0%.This is an increase from 2.9% in August. However, it is better than the expected 3.1%.
Core inflation, excluding food and beverage prices, rose 0.2% in September, down from 0.3% in August and better than the 0.3% forecast for September. that The 12-month core CPI rate was 3.0%.This is down from 3.1% in August and better than expectations of 3.1%.
Comerica expected to cut interest rates next week
Inflation was suppressed by air conditioning and used car prices, but was offset by the inflationary impact of tariffs and a shortage of migrant workers. Comerica Bank Chief Economist Bill Adams said.
There was a notable price increase in September compared to the same period last year, reflecting the impact of tariffs and immigration-related labor shortages. Coffee prices increased 19% year-on-year, and car repair prices increased 12%. Prices for gardening and lawn care services rose 14 percent, and the cost of caring for “disabled and elderly” people at home rose 12 percent, Adams said.
Adams also noted: Beef prices rise 15%However, home appliances are not affected by the tariffs. Smartphone prices drop 15%.
Adams added that the Fed is more concerned about the job market, which “has remained stable at best and slightly worsening at worst since the lockdowns began.”
Comerica predicted that the Federal Reserve would cut interest rates by 25 basis points. I’ll be attending the FOMC meeting next week and again in December.
Rate reductions in the past 12 months
| date | action | Change (bps) | New target range (%) |
|---|---|---|---|
| September 17, 2025 | ↓ | -25bps | 4.00 – 4.25 |
| July 30, 2025 | holding | 0 | 4.25 – 4.50 |
| June 18, 2025 | holding | 0 | 4.25 – 4.50 |
| May 7, 2025 | holding | 0 | 4.25 – 4.50 |
| March 19, 2025 | holding | 0 | 4.25 – 4.50 |
| January 29, 2025 | holding | 0 | 4.25 – 4.50 |
| December 18, 2024 | ↓ | -25bps | 4.25 – 4.50 |
| November 7, 2024 | ↓ | -25bps | 4.50 – 4.75 |
| September 18, 2024 | ↓ | -50bps | 4.75 – 5.00 |
Consumer sentiment index declines
Non-government consumer sentiment data was also released on Friday. University of Michigan Consumer Survey.
October results show consumer sentiment continuing to decline. In October The overall index fell to 53.6.It was significantly lower than the 55.1 in September and the 70.4 in October 2024. The score of 53.6 is the lowest since May.
inspection The current economic situation has dropped to 58.6.It was down from 60.4 in September. It was also 10% lower than a year ago.
jisoo Consumer expectations plummet to 50.3From September 51.7. It fell 32% from 74.1 in October 2024.
“Overall, consumers perceived little real change in economic conditions compared to last month,” said Joanne Hsu, director of consumer research. “Inflation and higher prices remain at the forefront of consumers’ minds. This month, there was little evidence that consumers linked the federal government shutdown to the economy.”
