Chart is for illustrative purposes only. Past performance is not necessarily an indication of future results.
Last week’s Consumer Price Index (CPI) report, a widely used indicator of inflation in the U.S. economy, showed modest growth from 2.9% on an annual basis in August to 3% in September. Yet, the number came in below analysts’ expectations, helping to allay fears of rising inflation. Consequently, the market ended the week higher.
Though the inflation reading was slightly higher than in August, a look at underlying components is encouraging. Core goods, food and core services ex-shelter have risen since April but appear to have peaked with readings either unchanged or lower in September. Importantly, shelter, which accounts for 35% of CPI, continues to slow, helping to stabilize inflation.
There is the question of what the impact of tariffs will be on inflation once all potential deals are in effect, but we maintain that the result will be a one-time rise in prices rather than a sustained increase. Our view is that inflation will remain within a range of 2.6% to 3.3% through year-end.
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Headline Consumer Price Index (CPI): Headline CPI is the broadest measure of inflation published by the U.S. Bureau of Labor Statistics. It tracks the average change over time in the prices paid by urban consumers for a fixed “basket” of goods and services—including all categories such as food, energy, housing, transportation, medical care, and more.
Core Consumer Price Index (CPI): Core CPI measures the same basket of urban‐consumer goods and services as headline CPI but excludes the two most volatile components—food and energy. By stripping out those price swings, core CPI helps reveal the underlying, longer-term trend in inflation.
Core goods: Core Goods are the portion of the Consumer Price Index measuring price changes for all goods (durable and non-durable) after stripping out the two most volatile categories—food and energy—so you can see the underlying trend in goods inflation.
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MARK-829983-2025-10-28