September 2025 CPI: Inflation, Tariffs, and Markets

The Bureau of Labor Statistics released this month’s Consumer Price Index (CPI) report this week to much anticipation. The monthly study is a critical component of financial planning for both government and private sector activities.

It highlights price changes to several critical categories in the market. As such, it’s used by many organizations and investors to provide transparency and plan their next moves. Here’s what you need to know.

How the Government Shutdown Delayed the CPI Report

Despite the CPI being regarded as a critical component in financial planning, it has been a struggle to get September’s report out on time. The government shutdown, which has passed the 20-day mark, has delayed the Bureau of Labor Statistics’ ability to conduct business as usual.

Source – CBS

The organization had to insist that its workforce complete the task while being furloughed due to the shutdown. As such, this financial data is the first and only concrete information expected to be provided by the federal government until the shutdown is complete. Consequently, this scenario could have a resounding effect on the economy, investors, and your pocketbook moving forward.

What is the Consumer Price Index (CPI)

The CPI directly measures the change in consumer goods and services. Specifically, the report delves into inflation of food, fuels, transportation, clothing, shelter, and healthcare, including drug costs.

The report, published monthly, is broken into two population groups. These groups include all urban consumers, urban wage earners, and clerical workers. Additionally, the data is split between normal and seasonally adjusted data.

Why the CPI is Important

The CPI serves a vital role in informing the masses on the state of the economy across several metrics. Its data is used by agencies to calculate crucial services, including the value of social security checks, government assistance programs, and subsidies.

It provides vital insight into economic change on a monthly and yearly basis, enabling planners to gain a deeper understanding of market conditions. It’s used by several government organizations and the Federal Reserve to determine how to alter interest rates, wages, pensions, and other crucial metrics. Also, it’s used to monitor important statistics such as the cost of living.

The private sector relies on this data. This measure of inflation can determine companies’ hiring practices, consumer price structure, and future adjustments to their business models. It’s used by these firms, like a lighthouse, helping them to avoid any potentially rocky situations forming in the economy before a crash.

What the September 2025 CPI Shows

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Data sources: U.S. Bureau of Labor Statistics, September 2025 CPI release.

There’s a lot of data that this month’s CPI shows. For one, it revealed that prices are on the rise. Consumer goods’ prices rose at the fastest rate they have all year in September. These price increases spanned the gamut of consumer goods.

In September, headline CPI rose 0.3% month-over-month (SA) and 3.0% year-over-year (NSA), up from 2.9% in August.

What September’s CPI Data Reveals About Consumer Spending

This month’s CPI shows some troubling trends emerging. For one, it highlights how the wealthiest 10% of Americans did the majority of spending in the US. Middle and lower-income families experienced a completely different economy, with the data revealing a strong pullback by these groups.

Less Middle Class

While there has always been a stark contrast between the wealthy and middle class in the US, this data seems to indicate that the middle class is slipping further towards debt and poverty. There are several factors driving these market movements.

Why Prices Are Rising for U.S. Consumers

This report reflects the effects of President Trump’s newly reinstated tariffs on imported consumer goods, part of the administration’s 2025 trade policy adjustments. These tariffs, paid by U.S. importers, have indirectly increased costs for consumers.

Tariffs

Interestingly, the report shows lower-than-expected price increases for several reasons. For one, manufacturers have chosen to incrementally increase the price of their goods rather than passing the tariff costs fully to their customers.

According to the report, only around 37% of new tariff costs have been directed to consumers, with companies choosing to swallow around 51% of the cost increase. These firms have chosen to spread their price increase across all parts of their business model, including a 9% increase to suppliers.

This decision is due to the belief that consumer sentiment is low and any price increases will be met with negative responses. However, these firms are now struggling to find a balance between consumer prices and meeting their investor obligations. As such, many are in a scramble to make up for lost revenue.

What Data Does the CPI Show Investors

The CPI report is broken down into several important categories listed as an index of consumer goods and services. This structure is vital as it helps to relay emerging trends and effects from new policy implementations.

The CPI is shown as a value versus a base year cost. September 2025 CPI is 324.800, up slightly from August, which registered at 323.976. Notably, the CPI Value gets calculated utilizing this equation:

• (Cost of goods/services in current period / Cost of goods/services in previous period) x 100

Here is just some of the information that investors reviewed in this report:

All Items Index

The all-items index provides an overview of all categories covered in the CPI report. This month’s report showed a 2.9% increase in prices when averaged and before seasonal adjustment. This price increase beats out last month’s report, which demonstrated a 2.7% yearly increase from July.

All Items Less Food and Energy

Another crucial index is the all items less food and energy category. As the name suggests, this removes the cost of food and energy, like gas and electricity, from the price of living. Notably, the report showed that this stat also rose by 0.2% in the last month due to tariffs. When zoomed out to the yearly growth, the index shows a 3.1% increase.

Index for Shelter

The index for shelter shows the cost of housing for Americans. The CPI showed that this was the category with the highest increase. It rose 0.4% in the last month, reflecting higher rents and a potential housing crisis looming in the market.

The factors leading to higher housing costs include baby boomers seeking premium value for their homes, rising costs due to short-term rentals, and limited new construction. Notably, there are several areas in the country driving this data upwards. Locations like Florida, New York, and California continue to squeeze renters and increase housing prices.

Food Index

It costs you more to fill your belly in September as well. The CPI showed a  0.5% increase in food prices over the last 30 days. Much of these increases is due to tariffs on imports of high-demand ingredients like bananas, peppers, seafood, coffee, and olive oil.

Additionally, tariffs on aluminum and steel have led to higher packaging costs for manufacturers. These costs have trickled down to supermarkets, which now face higher restocking charges. So far, they have managed to absorb the majority of these price increases. However, this practice is not sustainable, and experts expect the price increases to continue to trickle into the market.

Food at Home Index

The food index is broken into several subcategories, enabling investors to gain a deeper understanding of market conditions. The Food at Home Index reflects the cost of preparing your meals at home. Interestingly, this index saw a 0.6% increase this month.

Food Away from Home Index

The Food Away from Home Index also went up due to tariffs. However, the increase was lower than the Food at Home Index, as restaurants temporarily buffered consumers from rising costs. Specifically, this index increased 0.3% in September.

Index for Energy

The majority of people could have guessed that the cost of energy was up. The energy index showed that consumers paid 0.7% more for their energy in September 2025 versus the same time last year. Rising energy costs can be attributed to several factors, including rising transportation costs, inflation, supply chain delays, and competition from data centers.

Index for Gasoline

Gasoline prices went up amid the tariff commotion as well. The Gasoline index showed that consumers suffered a 1.9% price hike over the last 12 months. This increase can be felt across other indexes as gasoline costs directly affect the logistics sector.

Other Price Increases

The CPI report showed significant price increases in several critical sectors. Specifically, the data revealed that travel had become more expensive for people in almost all iterations. Airline ticket prices are up. Also, both used and new car prices continued to climb, mostly due to inflation, gas costs, and tariffs.

Some Price Decreases

Not every category reported by the CPI showed price increases. Some sectors actually saw slight price decreases. Specifically, the cost of medical care, communication, and recreation showed slight decreases.  However, some reports highlight a troubling gap between CPI-tracked cost growth and the real premium trends, leading many to speculate that the numbers are off.

Central Bank Decision Looming

Given the current state of the shutdown, it’s likely that no more financial data will be provided by the federal government until it reopens. As such, the central bank must make crucial decisions like adjusting the interest rates based on incomplete data moving forward.

Currently, the FED is debating how much further to reduce borrowing costs amid growing inflationary risks. Sadly, their decision will have to be based on limited data, as several other statistical agencies are currently furloughed, including the Census Bureau and the Bureau of Economic Analysis.

Despite the current situation, many expect the FED to lower interest rates next week. This maneuver is seen as a smart way to help push hiring in the private sector; however, as the effects of the shutdown continue to reverberate through the economy. As such, making informed decisions will become more difficult in the coming weeks.

What this Data Means for Traditional Markets

The traditional markets appear to be coping with the tariffs and other pressures currently applied to them. However, as they transition more towards consumer price increases, many aspects of the traditional market will likely face a pullback.

The stock markets are expected to remain strong, highlighting the growing disconnect between stock investors and the average consumer. Notably, both the S&P 500 and Nasdaq have grown in anticipation of lowered interest rates by the FED next week. However, this growth could stall next month as the growing uncertainty continues to slow momentum.

CPI Impacts on Crypto Markets

This month’s data suggests that institutional investors are driving the current crypto market movements. The average consumer is slowly being drained by rising costs and inflation. At the same time, institutional investors continue to seek out ways to secure their blockchain product offerings, like ETFs.

This scenario could lead to a short-term rise in Bitcoin and Ethereum prices, driven mainly by institutional products like ETFs. It could also signal approaching hard times for lesser-known altcoins and emerging projects that lack institutional support.

The CPI Shows Hard Times Ahead

It doesn’t take much time to see that the average consumer has experienced price increases across the board. These rising costs, especially in housing and energy, directly contribute to poverty. Consequently, it will be interesting to see how the Central Bank adjusts interest rates, given that this may be the last CPI report available to it for a while.

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