Everyone Is Waiting for Friday’s Big Inflation Report. Here’s What to Expect

The Anticipation Builds: Why the September CPI Report Matters

Every Friday, financial markets eagerly await the release of the consumer price index (CPI) report. This month is no exception; in fact, it’s more critical than ever given the dearth of other significant economic data due to a government shutdown. The release on October 27, 2025, will be particularly crucial as it serves as the last major economic indicator before the Federal Reserve’s policy meeting.

Troy Ludtka, senior U.S. economist at SMBC Nikko Securities, emphasizes that this report is of paramount importance. “Because we haven’t gotten any government data in the recent past, I think all of the market’s focus and all of the market’s attention are going to be directed onto this one report,” he stated.

Expected Numbers vs. Market Impact

The consensus among economists surveyed by Dow Jones is that the monthly all-items reading will increase by 0.4%, maintaining a steady pace similar to August. This puts the 12-month inflation rate at 3.1%, an increase of 0.2 percentage points from the previous month. Excluding food and energy, core CPI is projected to show a 0.3% monthly increase with a 3.1% annual level, unchanged from last month.

While these numbers are anticipated to be relatively stable, any deviation could trigger significant market reactions. “This is going to be the report to end all reports,” Ludtka further emphasized. Market participants will closely monitor whether inflation is running hotter or colder than expected and how President Donald Trump’s tariffs are impacting prices.

Expert Perspectives on Tariffs and Data Reliability

Goldman Sachs economists predict little change in auto prices, an increase due to car insurance, and a decline in airfare. On the tariff issue, they expect “upward pressure” in categories such as communication, household furnishings, and recreation but only add 0.07 percentage point to the core inflation figure.

However, Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management, warns about the reliability of the data given the shutdown. “We don’t have full clear clarity with the lack of important data points that the market depends on due to the government shutdown,” he noted. This uncertainty adds an additional layer of complexity to interpreting the numbers.

Despite these concerns, financial markets continue to show resilience, pushed by strong earnings and a surprisingly robust economic growth rate. A surprise from CPI might just provide the necessary volatility to shift some market narratives. “I would expect volatility if the number comes in higher than expected,” said Stephanie Link, chief investment strategist at Hightower Advisors.

Implications for Markets and Investors

The Federal Reserve’s policy meeting next week is widely anticipated to approve another quarter percentage point interest rate cut. In terms of market impact, a meaningful surprise could change the Fed’s decision-making process. “In terms of market impact, it would take a meaningful surprise to the upside for the market to change its mind about an additional interest rate cut,” Julien Lafargue, chief market strategist at Barclays Private Bank, explained.

Given the current state of the economy and strong earnings season, investors are cautiously optimistic. “I would view that as a buying opportunity as the economy is strong, the Fed is beginning a cutting cycle, EPS are growing double digits and the fourth quarter is seasonally the strongest quarter of the year,” Link concluded.

The upcoming CPI report could be pivotal in shaping market expectations and guiding future decisions by investors and policymakers alike. As the financial world awaits this critical piece of economic data, the eyes of Wall Street remain firmly fixed on Friday’s release.