Inflation increased 0.3 percent in September, higher prices still sticking around: CEI analysis

September saw an inflation increase of 0.3 percent across all sectors, in line with economists’ predictions. CEI senior economist Ryan Young says today’s news likely won’t affect the Federal Reserve’s upcoming interest rate decisions.

“Year-over-year inflation continues to increase and is now up to 3.0 percent. Since today’s reading was close to expectations, it likely won’t change the Fed’s plan to continue cutting interest rates at its next two meetings.

“While interest rate cuts can have a short-term stimulus effect on a troubled labor market, the tradeoff is the risk of higher inflation. That tradeoff is why the Fed was reluctant to cut rates until recently.

“Tariffs typically have a one-time effect on the CPI. The worry is that upcoming Fed policy, especially on its balance sheet, which many observers overlook, might cause higher inflation for a longer period of time, above and beyond what tariffs are doing to prices.”