US inflation came in softer than expected in September, with markets pricing in two rate cuts this year. Nathaniel Casey, Investment Strategist at UK wealth manager Evelyn Partners, has shared his thoughts.
“September’s inflation report, delayed due to the government shutdown, was slightly softer than expected with a 0.3% month-on-month print, pushing the annual rate to 3.0%. Much of September’s strength came from energy and core goods, with gasoline prices rising notably through the month. Core inflation also softened to 3.0%.
“We continue to see evidence of tariff impacts creeping into the inflation data, with core goods inflation accelerating from 0.3% year-on-year in May to 1.5% year-on-year in September. Within this. the basket for Apparel (an import sensitive segment) accelerated by 0.7% month-on-month in September, its highest rate since this time last year.
“The latest US inflation report surprised to the downside, and despite ongoing tariff uncertainty, it remains consistent with the Fed’s easing path. Core inflation eased while headline inflation rose only modestly, suggesting price pressures are contained. With labour market softness still the dominant concern, markets continue to price in 25-basis-point rate cuts at both the October and December Federal Open Market Committee meetings.”
