Has inflation started to bite?
Posted on October 24, 2025
Inflation has not started to bite. Inflation reported today shows September inflation was not much different that the last six months. It’s not pointing to the Federal Reserve’s target of 2%, but we can’t conclude that it’s increasing.
I display a table and five graphs that I use to follow the trends in inflation. I usually include a sixth, but it was not updated today.
Details:
The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.
Seasonally-adjusted inflation is the most widely reported measure of inflation. September inflation was at a rate of 3.6% inflation, but this was less than inflation in August. Inflation for the last six months was at 3.0% annual rate. This is matches the 12-month inflation rate.
Core inflation excludes volatile energy and food components. Inflation for September was less than August. It’s the same story as for seasonally adjusted inflation: the last six months run at 3.0% inflation, the same as the 12-month rate.
Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors. It’s similar to Core inflation, but tends to run a bit lower over time. The graph shows the data ending August; data for September is issued at the end of this month. The last six aim at an annual rate of 2.7%.
== History of 12-month inflation rates ==
Full-year inflation measured by CPI-U was 3.0%. That’s 0.1% greater than last month.
I add a graph that shows this August and September replaced low months a year ago. The next three months will replace very low months from a year ago. The 12-month inflation for this measure will likely increase in the next four months.
== Producer’s Price Index ==
We don’t have data on this index for September.
== Services ==
Inflation for services for September was lower than August. The last six months average to 3.4% annual rate. The 12-month rate is 3.5%.
Conclusion: The inflation measures released today for September were similar to August and recent months. We have not seen much of an increase due to greater tariffs. Inflation runs as about 3.0%. We are not trending to 2% annual inflation, the Federal Reserve’s goal.