Uncertainty looms over the U.S. economy. It is most outcome-flexible when it comes to inflation, where it looks forward to the September Consumer Price Index (CPI) report. That’s because on Thursday, the Bureau of Labor Statistics (BLS) will release a report that’s closely watched for the unparalleled clues it offers as to the direction inflation is heading. The prolonged government shutdown has shuttered a blackout on critical economic data.
That would mark the first increase in the annual rate of inflation, economists — including Michael Pugliese, senior economist at Wells Fargo — are already forecasting. It could jump from 2.9% to 3.1%, marking the largest leap in more than a year. That’s right — inflation hasn’t been below 2% since February of 2021. This constitutes an extraordinary change in economic circumstance since then. The upcoming CPI report is expected to showcase how consumer prices are trending, amid rising costs for essential goods and services.
Impact of the Government Shutdown
The current government shutdown has resulted in a disruption of important economic data releases, complicating the analysis of the U.S. economic landscape. In fact, economists are concerned that COVID-era gaps in data may be obscuring the true state of inflation. This regulatory uncertainty would do a disservice to consumers.
Pugliese was quick to draw attention to the broader impact of the shutdown on tracking longer-term inflation trends. He highlighted that, “At the macro level, it’s a reminder of how sticky inflation can be when it gets out of the tube and how hard it is to get back to that 2% once it’s been above target for a while.” This statement underscores the challenges policymakers may face in managing inflation as they navigate the complexities introduced by the shutdown.
That’s why the September CPI report is so critically important. It will lay the groundwork for the policy debates on appropriate cost of living adjustments for 2026. These findings will serve as a valuable foundational resource to better understand the effects of increasing prices on the nation’s households. This is especially urgent considering skyrocketing food and utility expenses in recent months.
Rising Prices Across the Board
Everybody knows inflation has hit hard on the things average people buy. They increased 0.4% last month! In fact, future food prices are predicted to rise a further 24% up to 2024, with some goods already witnessing drastic food price inflation. Beef prices, for example, have shot up in recent months as an extended drought across the western U.S. has decimated livestock production.
Additionally, cocoa prices have reached levels that are “still about double, if not triple, what they were in 2022-’23,” further contributing to inflationary pressures faced by consumers. The increase in grocery prices—0.6% in August—represents the largest monthly jump in close to three years.
Economist Joe Brusuelas, with a very sharp eye on the household pulse, raised his doubts over sticking inflationary pressures. He remarked, “What I am concerned about is the sticky and stubborn service sector costs along with rising food and utility prices, which are really placing stress on middle-class and down-market households.” This view humanizes the heavy, regressive impact of inflation on at-risk populations.
Stubborn Inflation in Services
Service-related inflation remains a top priority according to the White House, as prices for discretionary services like airfare stay persistently elevated. This trend is particularly concerning to consumers already having to deal with inflated prices across many necessary commodities.
Billy Roberts, a maritime industry analyst, pointed out that most of these increases are for products that consumers don’t buy on a day-to-day basis. He stated, “Those aren’t items that consumers necessarily buy week in and week out,” emphasizing that while certain prices may fluctuate, the overall burden on household budgets remains significant.
Brusuelas further elaborated on the cumulative effect of inflation over time, stating: “We’ve seen smaller degrees of inflation, even over the course of this year, but it’s really that cumulative effect.” He noted that even incremental increases can create a very real financial strain for families. Others find it impossible to make ends meet day to day.