Consumer Price Index—September 2025

What happened to inflation in September?

After weeks of delay due to the government shutdown, September’s consumer price index (CPI) finally arrived, bringing a measure of relief with inflation coming in as expected. Headline CPI rose 0.3% month over month and 3% year over year, while core CPI, which excludes food and energy, increased 0.2% month over month and 3% year over year. With federal data releases otherwise halted, this report offered the only major inflation input for the Federal Reserve ahead of its Oct. 28–29 meeting.

What are the implications for the economy and Fed policy?

For the Fed, this benign reading reinforces expectations for a 25 basis-point rate cut next week, while reducing the pressure to signal a faster or deeper easing path. Inflation remains above target but continues to move gradually. On the other side of the dual mandate, labor market data, now frozen by the shutdown, shows signs of weakening. Policymakers will enter the October meeting with extremely limited visibility: The Fed’s preferred PCE measure won’t arrive until after the meeting (and may be subject to further shutdown-related delays), keeping the market’s focus squarely on December as the next meaningful signal for policy direction.

What does this mean for homebuyers and sellers?

For housing, Friday’s report offers a dose of optimism following another pickup in home sales last month. A calmer inflation trend could help ease upward pressure on long-term yields, keeping the 10-year Treasury near 4% and mortgage rates around 12-month lows. Lower rates would improve affordability and give homebuyers more purchasing power heading into year’s end, but they aren’t a cure-all. Inflation still erodes household budgets and savings potential, limiting how quickly demand can rebound. A strong, confident consumer and labor market remains the foundation for a sustained housing recovery.